Vito v. Canzoneri

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA and the

STATE OF NEW YORK ex rel. GEORGE

R. VITO, DPM,

20-CV-505-LJV

Relator/Plaintiff, DECISION & ORDER

v.

JOSEPH R. CANZONERI, DPM; et al.,

Defendants.

On April 27, 2020, the plaintiff-relator, George R. Vito, filed this action against

Joseph R. Canzoneri; Advanced Podiatry Associates, PLLC (“APA”); and Healogics,

Inc. Docket Item 1. He alleged that Canzoneri, APA, and Healogics violated the False

Claims Act (“FCA”), 31 U.S.C. § 3729 et seq.; the New York False Claims Act

(“NYFCA”), N.Y. Finance Law § 187 et seq.; and New York State common law by

improperly reusing single-use medication vials, soliciting unearned payments from Vito,

and retaliating against Vito for objecting to those practices. See id.; see also Docket

Item 28. Vito asserted qui tam claims on behalf of the United States and New York

State as well as retaliation claims on his own behalf. See Docket Item 1; Docket Item

28.

On June 18, 2021, Vito filed an amended complaint. Docket Item 28. The

defendants then moved to dismiss the amended complaint, Docket Items 32-34, and on

March 22, 2022, this Court granted those motions in part, Docket Item 42. More

specifically, the Court dismissed Vito’s qui tam common law fraud claim without leave to

amend and found that his remaining claims were subject to dismissal but gave him

leave to amend those claims. See id.

Vito then filed a second amended complaint, Docket Item 44, and voluntarily

dismissed his claims against Healogics, Docket Item 51. On June 24, 2022, APA and

Canzoneri renewed their motion to dismiss, Docket Item 55; on July 8, 2022, Vito

responded to that motion, Docket Item 56, and on July 15, 2022, APA and Canzoneri

replied, Docket Item 57.

For the reasons that follow, Vito’s statutory qui tam claims are dismissed

because he still has not pleaded the submission of false claims with sufficient

particularity. Vito’s retaliation claims against Canzoneri also are dismissed, but his

retaliation claims against APA may proceed.

FACTUAL BACKGROUND1

Vito and Canzoneri are both podiatrists who practice in New York State. Docket

Item 44 at ¶¶ 11-12. Vito previously worked at APA, a professional limited liability

company “wholly owned by [] Canzoneri,” under a “July 23, 2018 Employment

Agreement.” Id. at ¶¶ 13, 23. Under that agreement, Vito and Canzoneri shared

hospital privileges at United Memorial Medical Center (“UMMC”) in Batavia, New York,

where Vito “performed surger[ies].” Id. at ¶ 24.

1 The following facts are taken from the second amended complaint, Docket Item

44. On a motion to dismiss under Rule 12(b)(6), the Court “accept[s] all factual

allegations as true and draw[s] all reasonable inferences in favor of the plaintiff.” Trs. of

Upstate N.Y. Eng’rs Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561, 566 (2d Cir.

2016).

Vito says that he witnessed or experienced several problems at APA. For

example, Vito says that “on several occasions[] beginning in March or April 2019,”

Canzoneri would “treat[] Healogics’ Wound Care Center patients, br[ing] them to the

UMMC Operating Room, use[] medication packaged in single dose vials, then t[ake] the

remainder of those partially used medication vials to re-use, with different patients, at

his APA practice office.” Id. at ¶ 26. That improper recycling “of partially used non-

sterile contaminated single[-]use medication vials ignored infection control standards

and exposed patients to harm and infection.” Id. at ¶ 31.

Vito claims that the improper reuse of single-use medication not only exposed

patients to harm but also led to the submission of fraudulently inflated bills. After a

podiatrist gives a medication injection, he or she submits a bill to “Medicare, Medicaid,

[or] other insurers” for “the physical act [of] giving an injection.” Id. at ¶ 36. But “[i]f a

podiatrist bills for the actual medications as well as the physical act of giving the

injection, the reimbursement rate is higher.” Id. at ¶ 37.

Vito says that Canzoneri took advantage of that higher reimbursement rate and

“billed for the actual injection plus the medications, . . . even though [] Canzoneri was

often re-using ‘no cost’ single[-]use vials obtained unlawfully from UMMC.” Id. at ¶ 41.

That is, Vito says that “APA’s billing was fraudulently inflated” and “resulted in

overpayment” because Canzoneri and APA would request reimbursement for both the

medication injections and for the single-use medication vials that were pilfered from

UMMC. Id. at ¶ 38. And Vito theorizes that because Canzoneri treated “Medicare and

Medicaid patients, and patients who paid with or through private insurer[-]administered

Medicare Advantage or Medicare Supplement plans,” those fraudulently inflated bills

must have been submitted to the United States or New York State governments for

reimbursement. See id. at ¶¶ 46-48.

Vito “raised [] concerns regarding [] Canzoneri’s” misuse of single-use medication

to UMMC staff and to Canzoneri in April and May 2019; Vito says that “other UMMC

operating room nurses [also] knew [] Canzoneri had been removing partially used

single[-]dose vials out of the hospital” to use in his office. Id. at ¶¶ 32-33, 50. And in

May 2019, Vito filed a whistleblower complaint with the United States Department of

Health and Human Services Office of Inspector General. Id. at ¶ 51.

Moreover, on May 31, 2019, Vito “reported [] Canzoneri’s re-used sing[le-use]

medication vial scheme to UMMC[’s] Chief Medical Officer” and “Surgery Department

Chair.” Id. at ¶ 52. In addition, he also told the Surgery Department Chair that

Canzoneri “insisted Vito continue to pay $250 per procedure to [] Canzoneri, even

though Canzoneri would no longer be scrubbing in for such procedures.” Id. at ¶ 53.

The next day, Canzoneri “terminated Vito’s employment with APA.” Id. at ¶ 54.

A little more than four months later, UMMC’s Chief Medical Officer sent a

memorandum to the UMMC Surgery Department about the improper reuse of single-

use medication vials. Id. at ¶ 55. That memorandum noted that UMMC had “received a

complaint that partially used single[-]use medications [were] being removed from the

[operating room] for use in a surgeon’s office.” Id. And it warned that removing partially

used single-use medication from the operating room was a “violation of hospital [] policy

and Department of Health regulations,” noting that “hospital supplies may not be

removed from the hospital to a physician[’s] office.” Id.

Toward the end of 2019, Vito met with federal and state officials about

Canzoneri’s scheme to improperly reuse single-use medication vials. See id. at ¶¶ 61-

64. Vito then filed this action on April 27, 2020. Docket Item 1. After the United States

declined to intervene in February 2021, the case was unsealed, and Vito pursued his

claims as a qui tam relator in the name of the United States. See Docket Item 10. New

York State declined to intervene about a month later. See Docket Item 14.

LEGAL PRINCIPLES

“To survive a motion to dismiss, a complaint must contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is

not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a

defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556).

DISCUSSION

I. STATUTORY QUI TAM CLAIMS

“The FCA is an anti-fraud statute that ‘may be enforced not just through litigation

brought by the [g]overnment itself, but also through civil qui tam actions that are filed by

private parties, called relators, in the name of the [g]overnment.’”2 U.S. ex rel.

2 “The NYFCA mirrors the federal FCA, and New York courts look to federal law

to interpret the state statute.” U.S. ex rel. Pelullo v. Am. Int’l Grp., Inc., 757 F. App’x 15,

Chorches for Bankr. Est. of Fabula v. Am. Med. Response, Inc., 865 F.3d 71, 81 (2d

Cir. 2017) (internal quotation marks omitted) (quoting Kellogg Brown & Root Servs., Inc.

v. U.S. ex rel. Carter, 575 U.S. 650, 653 (2015)). As relevant here, the FCA provides

that any person who “knowingly presents, or causes to be presented, a false or

fraudulent claim for payment or approval” is “liable to the United States government.”3

31 U.S.C. § 3729(a)(1)(A); see also N.Y. Finance Law § 189(1)(a) (parallel provision of

the NYFCA).

“The FCA defines a ‘claim’ as ‘any request or demand for money or property’ that

is presented, directly or indirectly, to the United States.” Chorches, 865 F.3d at 81

(alterations omitted) (quoting 31 U.S.C. § 3729(b)(2)(A)); see also N.Y. Finance Law §

188(1) (“‘Claim’ [] means any request or demand, whether under a contract or

17 (2d Cir. 2018) (summary order). This Court therefore considers Vito’s FCA and

NYFCA claims simultaneously.

3 In his first amended complaint, Vito alleged that Canzoneri and APA violated 31

U.S.C. § 3729(a)(1)(A) and (B). See Docket Item 28 at ¶¶ 55-62. Vito omitted the

reference to 31 U.S.C. § 3729(a)(1)(B) in his second amended complaint, see Docket

Item 44 at ¶¶ 80-88, so this Court considers only whether Vito has sufficiently alleged

that APA and Canzoneri violated 31 U.S.C. § 3729(a)(1)(A).

Vito also cursorily alleges that Canzoneri and APA “committed and conspired to

commit violations of . . . 31 U.S.C. § 3729(a)(1)(A) and (E). Id. at ¶ 88. It is not at all

clear from the second amended complaint how section 3729(a)(1)(E), which relates to

“document[s] certifying receipt of property used, or to be used, by the [g]overnment,”

see 31 U.S.C. § 3729(a)(1)(E), is relevant to Vito’s claims. And Vito offers only a

fleeting reference to any conspiracy to violate the FCA; in fact, Vito’s conspiracy claim

rests on his bare assertion that the defendants “conspired to commit violations of” two

sections of the FCA. See Docket Item 44 at ¶ 88. Those conclusory allegations,

without more, are not sufficient to state a conspiracy claim. See U.S. ex rel. Duhaine v.

Apple Health Care Inc., 2022 WL 3226631, at *9 n.27 (D. Conn. Aug. 10, 2022)

(dismissing FCA conspiracy claim that “improperly rests on speculation and conclusory

allegations”). Therefore, to the extent that Vito asserts that Canzoneri and APA violated

31 U.S.C. § 3729(a)(1)(E) and conspired to violate 31 U.S.C. § 3729(a)(1)(A) and (E),

those claims are dismissed.

otherwise, for money or property that [] is presented to an officer, employee[,] or agent

of the state or a local government.”). “Fraud under the FCA has two components: the

defendant must submit or cause the submission of a claim for payment to the

government, and the claim for payment must itself be false or fraudulent.” Chorches,

865 F.3d at 83 (alterations omitted) (quoting Hagerty ex rel. U.S. v. Cyberonics, Inc.,

844 F.3d 26, 31 (1st Cir. 2016)).

“Qui tam complaints filed under the FCA, because they are claims of fraud, are

subject to Rule 9(b).” Id. at 81; see also U.S. ex rel. SW Challenger, LLC v. EviCore

Healthcare MSI, LLC, 2021 WL 3620427, at *7 (S.D.N.Y. Aug. 13, 2021) (“Rule 9(b)

also applies to claims brought under state analogues of the FCA in federal court.”).

That rule requires a party “alleging fraud or mistake” to “state with particularity the

circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b). “That ordinarily

requires a complaint alleging fraud to ‘(1) specify the statements that the plaintiff

contends were fraudulent, (2) identify the speaker, (3) state where and when the

statements were made, and (4) explain why the statements were fraudulent.’”

Chorches, 865 F.3d at 81 (quoting U.S. ex rel. Ladas v. Exelis, Inc., 824 F.3d 16, 25 (2d

Cir. 2016)). “But ‘the adequacy of particularized allegations under Rule 9(b) is case-

and context-specific.’” Id. (alterations omitted) (quoting Espinoza ex rel. JPMorgan

Chase & Co. v. Dimon, 797 F.3d 229, 236 (2d Cir. 2015)). And in some circumstances,

a qui tam relator can satisfy Rule 9(b) without identifying specific claims submitted to the

government; in other words, a qui tam relator can plead the existence of those claims

“on information and belief.” See id. at 86-89.

To do so, however, a relator must provide “plausible allegations creating a strong

inference that specific false claims were submitted to the government and that the

information that would permit further identification of those claims is peculiarly within the

opposing party’s knowledge.” Id. at 86; see also U.S. ex rel. Gelbman v. City of New

York, 790 F. App’x 244, 248 (2d Cir. 2019) (summary order) (“[T]o survive dismissal

under Rule 9(b) when the complaint pleads only on information and belief that

fraudulent claims were actually submitted to the United States, a plaintiff must (1) ‘make

plausible allegations that the bills or invoices actually submitted to the government were

uniquely within the defendant’s knowledge and control,’ and (2) ‘adduce specific facts

supporting a strong inference of fraud.’” (alterations omitted) (quoting Chorches, 865

F.3d at 83)). “Those requirements ensure that those who can identify examples of

actual claims must do so at the pleading stage.” Chorches, 865 F.3d at 86 (emphasis in

original).

In its prior decision, this Court found that Vito’s FCA and NYFCA qui tam claims

were subject to dismissal because he had neither alleged the submission of particular

false claims nor offered factual allegations that gave rise to “a strong inference that

specific false claims were submitted to the government.” See Docket Item 42 at 11

(quoting Chorches, 865 F.3d at 86). Vito now provides some additional context for his

assertion that Canzoneri’s improper recycling of single-use medication vials led to the

submission of false claims to the federal and state governments. But Vito’s second

amended complaint still lacks the sort of specificity that is necessary to allege qui tam

claims under the FCA or NYFCA.

In his second amended complaint, Vito alleges that Canzoneri improperly took

single-use medication vials from UMMC to reuse with different patients at the APA

office. Docket Item 44 at ¶ 26. And Vito says that both he and Canzoneri “regularly and

consistently treated Medicare and Medicaid patients, and patients who paid with or

through private insurer[-]administered Medicare Advantage or Medicare Supplement

plans.” Id. at ¶ 46.

Vito then provides information about general billing practices at the APA office,

including the “APA office billing codes used for injection[s].” Id. at ¶ 45. He also says

that “each medication injection, which might include short-term and long-term

anesthetics and/or steroids, is normally billed by a podiatrist[] in an office or clinic setting

at $120.00-$195.00.” Id. at ¶ 28. Vito says that “Medicare, Medicaid, and other

insurers” generally pay more when a podiatrist “bills for the actual medications as well

as the physical act of giving [an] injection.” Id. at ¶¶ 36-37. Finally, Vito offers a broad

overview of “pertinent Medicare and Medicaid program requirements,” including the

general “requirement that providers be truthful in submitting claims for reimbursement,”

which “is a precondition for participation in the Medicare program, the Medicaid

program, and other federally funded healthcare programs.” Id. at ¶ 78.

Essentially, Vito reasons that Canzoneri and APA must have submitted false bills

to the federal and state governments because Canzoneri (1) reused single-use

medication vials when he treated some patients, (2) billed for those improperly reused

vials, and (3) treated some patients who were insured by Medicare, Medicaid, or other

“private[-]insurer administered Medicare Advantage or Medicare Supplement plans.” Id.

at ¶ 48. But those allegations amount to nothing more than “a course of conduct or

scheme which [Vito] assumes culminated with the submission of claims.” See Ameti ex

rel. U.S. v. Sikorsky Aircraft Corp., 2017 WL 2636037, at *6 (D. Conn. June 19, 2017).

That is, this Court can only speculate about whether Canzoneri or APA actually reused

single-use medication vials for Medicare or Medicaid patients—and submitted false bills

to the federal and state governments for those reused vials—or whether those costs

were instead passed on only to patients or private insurers.4 That sort of speculation is

not enough to support a “strong inference that specific false claims were submitted to

the government.” Chorches, 865 F.3d at 86; see also U.S. ex rel. Thayer v. Planned

Parenthood of the Heartland, 765 F.3d 914, 917 (8th Cir. 2014) (contrasting inadequate

claims brought by a relator “who had no direct connection to the hospital’s billing or

claims department and could only speculate that false claims were submitted” with

claims brought by a relator who “oversaw Planned Parenthood’s billing and claims

systems[] and was able to plead personal, first-hand knowledge of Planned

Parenthood’s submission of false claims”).

Indeed, Vito himself suggests that his claims rest on little more than speculation:

He alleges that “[t]o the extent [] Canzoneri and/or APA billed for” the single-use

medications that may have been used for Medicare or Medicaid patients, those bills

were “fraudulently inflated and resulted in overpayment.” See Docket Item 44 at ¶ 48.

4 In fact, because Vito does not allege facts suggesting that the defendants

actually billed for the medication taken from a pilfered single-use vial, the Court would

have to speculate about that as well. In other words, Vito simply assumes that the

defendants billed for the reused single-use vials the same way that they billed when

using fresh vials. And while Vito provides information about his own billing practices

and suggests that he may have unwittingly billed for single-use medication vials, see

Docket Item 44 at ¶¶ 42, 56, he says nothing about why he cannot allege specifics even

about those bills that he submitted.

So Vito implicitly admits that he does not know whether Canzoneri ever used those

partially used medications for Medicare or Medicaid patients, let alone that Canzoneri

then passed consequently inflated bills on to the federal or state government.

Nor has Vito alleged that “the information that would permit further identification

of [false] claims is peculiarly within the opposing part[ies’] knowledge.” Chorches, 865

F.3d at 86. Vito says that he “was not directly involved in billing at [] Canzoneri’s office[]

where issued bills were made payable to APA or . . . Canzoneri.” Docket Item 44 at ¶

45. But elsewhere in the second amended complaint, Vito does provide information

about Canzoneri’s billing practices. See, e.g., id. at ¶ 39 (“Canzoneri did not use a

‘superbill’ form, with itemized breakdowns of the billing components, for procedures at

the APA office.”). What is more, Vito alleges that he may have unknowingly completed

false claims himself: He says that “before [he] discover[ed] the multitude of single[-

]dose vials in a storage cabinet at the APA office,” he “unwittingly us[ed] partially used

single[-]dose medication vials illegally procured by Canzoneri” and then submitted bills

“using Medicare or Medicaid approved billing forms.” Id. at ¶ 56. But Vito does not

explain how he now knows that he “unwittingly” used partially used vials, nor does he

say why he cannot provide additional information about the bills that he submitted or

why that information would be “peculiarly within the opposing part[ies’] knowledge.”

Chorches, 865 F.3d at 86.

Vito primarily leans on four appellate court decisions in contending that his claims

are viable here: Chorches; Godecke v. Kinetic Concepts, Inc., 937 F.3d 1201 (9th Cir.

2019); United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009); and

United States ex rel. Duxbury v. Ortho Biotech Products, L.P., 579 F.3d 13 (1st Cir.

2009). See Docket Item 56 at 17-21. But a closer look at those decisions further

illustrates why Vito’s second amended complaint does not clear the Rule 9(b) bar.

First, as this Court discussed in its prior decision, see Docket Item 42 at 8-9, the

relator in Chorches offered allegations clearly suggesting both the existence of a

specific scheme to fraudulently bill Medicare and Medicaid and the submission of false

claims as a result of that scheme. In Chorches, a former emergency medical technician

(“EMT”) alleged that his supervisors “specifically instructed EMTs and paramedics how

to modify” ambulance “run” reports to “ensure that [those] runs would be reimbursable

by Medicare” and Medicaid. Chorches, 865 F.3d at 76. In fact, the relator’s supervisors

“admitted to [him] that the purpose of [the] revisions was to qualify the [ambulance] run

for Medicare reimbursement.” Id. And the relator “identifie[d] more than ten specific

runs for which [he] was ordered to alter [reports] to include false or misleading

information” to ensure that the runs were reimbursable. Id. at 77.

Likewise, the relator in Godecke, a former employee of a “specialized billing

company,” alleged specific details of a scheme to submit false requests for

reimbursement from Medicare. Godecke, 937 F.3d at 1205. More specifically, the

relator in that case alleged that a medical device company knowingly used incorrect

billing codes for medical devices that were delivered before any physician submitted a

“detailed written order” for the device, even though that written order was required for

reimbursement. Id. at 1206-07. The relator offered “fifteen representative examples of

false claims that were submitted for reimbursement,” which she identified by “cross-

referencing” a group of claims with an internal company report. Id. at 1207. Using that

report, the relator “rule[d] out” the possibility that the medical device company’s claims

accurately disclosed the basis for the claims. Id. at 1209. And the relator also alleged

that she discussed this billing problem with a former colleague, who “confirmed to [the

relator] that she personally saw that claims . . . had routinely been billed to Medicare,

and paid by Medicare, even though” those claims were not reimbursable. Id. at 1210

(internal quotation marks omitted).

In Grubbs, the Fifth Circuit similarly concluded that a relator’s complaint was

sufficient “even though it d[id] not include exact billing numbers or amounts.” Grubbs,

565 F.3d at 192. There, the relator, a former psychiatrist at a Texas hospital, alleged

that he was asked to participate in a fraudulent scheme to bill for “face-to-face physician

visits that had not occurred.” Id. at 184. The relator was told about that fraudulent

billing scheme by several doctors and by nursing staff, and a hospital administrator

impliedly confirmed the existence of the scheme when the relator raised questions. See

id. In addition to describing the scheme, “the complaint aver[red] at least one overt act

of false billing for each doctor” who participated in the scheme: for example, the relator

alleged that “Dr. Desai billed Medicaid for psychotherapy services on January 8, 2004,

CPT Code #90805, which constituted a false claim in that the medical records indicate

that no psychotherapy was provided by Desai on that date.” See id. at 184-85. So the

relator’s complaint “set[] out the particular workings of a scheme” to submit fraudulent

bills to Medicare and Medicaid, which was based on information “that was

communicated directly to the relator by those perpetrating the fraud.” Id. at 191. In

other words, the relator in Grubbs alleged facts supporting a strong inference that

fraudulent bills were submitted to the government because those involved in the

scheme personally informed the relator that they submitted such fraudulent bills and

then tried to rope him into the scheme.

Finally, the First Circuit in Duxbury reversed dismissal of an FCA claim on the

grounds that the relator sufficiently alleged the submission of false claims, even though

the relator had not provided “details as to each false claim.” Duxbury, 579 F.3d at 29.

In that case, the relator, a former sales representative for a pharmaceutical company,

alleged that the company provided “free commercially packaged” drug product to

healthcare providers to artificially inflate the price of that drug product; those providers

in turn requested reimbursement for the free distributions. See id. at 17, 29-30. The

relator identified “eight healthcare providers” that submitted false claims, and included

“information as to the dates and amounts of the false claims filed by these providers

with the Medicare program.” See id. at 30. Based on those allegations, the First Circuit

concluded that the relator “ha[d] identified, as to each of the eight medical providers (the

who), the illegal kickbacks (the what), the rough time periods and locations (the where

and when), and the filing of the false claims themselves.”5 Id.

In sum, those four cases were brought by relators who offered detailed

allegations, based on their own personal knowledge, to support their claims that false

claims were submitted to the government. Here, by contrast, Vito only speculates that

partially used single-use medications were in fact used for Medicare or Medicaid

5 Even though the First Circuit found that those allegations satisfied Rule 9(b), it

explicitly acknowledged that the issue was a “close call.” Duxbury, 579 F.3d at 30; see

also U.S. ex rel. Ge v. Takeda Pharm. Co., 737 F.3d 116, 124 (1st Cir. 2013)

(characterizing the allegations in Duxbury as “barely adequate”).

patients and improperly billed to the federal or state government. See Docket Item 44

at ¶ 48.

But as Chorches makes clear, a relator cannot “base claims of fraud on

speculation and conclusory allegations.” Chorches, 865 F.3d at 86 (quoting Wexner v.

First Manhattan Co., 902 F.2d 169, 172 (2d Cir. 1990)). Instead, Rule 9(b) requires that

a relator not simply detail a fraudulent scheme, but provide allegations that “support[] a

strong inference that false claims were submitted to the government.” Id. (emphasis in

original). Because Vito has not “state[d] with particularity the circumstances constituting

fraud,” Fed. R. Civ. P. 9(b), and because his allegations are grounded in speculation

about bills that might have been submitted, his statutory qui tam claims are dismissed.6

II. RETALIATION CLAIMS

Section 3730(h)(1) of the FCA protects an employee against retaliation “because

of lawful acts done by the employee[] . . . in furtherance of an action under this section

or other efforts to stop [one] or more violations” of the FCA. 31 U.S.C. § 3730(h)(1); see

also N.Y. Finance Law § 191(1) (NYFCA anti-retaliation provision). Just as NYFCA qui

tam claims parallel FCA claims under section 3729, retaliation claims under the NYFCA

follow the FCA as well. See Dhaliwal v. Salix Pharms., Ltd., 752 F. App’x 99, 100 (2d

6 Although “[c]omplaints dismissed under Rule 9(b) are almost always dismissed

with leave to amend,” further leave to amend may be denied where a plaintiff “already

had one opportunity to plead fraud with greater specificity.” See Luce v. Edelstein, 802

F.2d 49, 56 (2d Cir. 1986) (citation and internal quotation marks omitted); see also ATSI

Commc’ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 108 (2d Cir. 2007) (affirming

dismissal without further leave to amend after the plaintiff already “was given th[e]

opportunity” to amend its complaint to satisfy Rule 9(b) but failed to do so). Vito had

that opportunity here, and he does not give any further indication of how he could allege

viable qui tam claims.

Cir. 2019) (summary order). Unlike statutory qui tam claims, however, retaliation claims

under the FCA and NYFCA are not subject to Rule 9(b). See Chorches, 865 F.3d at 95;

see generally Dhaliwal, 752 F. App’x at 100.

To state a claim for retaliation under the FCA, a plaintiff “generally [must] show

that (1) he engaged in activity protected under the statute, (2) the employer was aware

of such activity, and (3) the employer took adverse action against him because he

engaged in the protected activity.” Dhaliwal, 752 F. App’x at 100. “The inquiry as to

whether an employee engaged in protected conduct involves determining whether an

employee’s actions sufficiently furthered an action filed or to be filed under the FCA,

and, thus, equated to ‘protected conduct.’” U.S. ex rel. Scharff v. Camelot Counseling,

2016 WL 5416494, at *10 (S.D.N.Y. Sept. 28, 2016) (citation omitted).

“‘Protected activity’ is interpreted broadly, and an employee’s activities may be

protected even where an FCA suit has not been filed.” Id. (citation and internal

quotation marks omitted); see also Dhaliwal, 752 F. App’x at 100 (explaining that the

FCA prohibits “retaliation against not only those who actually file a qui tam action, but

also against those who plan to file a qui tam [action] that never gets filed, who blow the

whistle internally or externally without the filing of a qui tam action, or who refuse to

participate in the wrongdoing” (italicization added) (quoting Chorches, 865 F.3d at 97)).

Thus, it is sufficient “to show that a plaintiff’s investigation reasonably could have led to

an FCA action.” Dhaliwal, 752 F. App’x at 100 (alterations and citation omitted); see

also Hayes v. Dep’t of Educ. of City of N.Y., 20 F. Supp. 3d 438, 443 (S.D.N.Y. 2014)

(“There is no question that if [the p]laintiff has properly pleaded a claim for retaliation,

she is permitted to do so irrespective of the fate of her FCA qui tam claim.”).

In its prior decision, this Court found that Vito’s retaliation claims were subject to

dismissal because he alleged that he was fired not because of any protected activity but

because he “object[ed] to Canzoneri’s request that Vito pay $250 per procedure even

though Canzoneri would no longer be scrubbing in.” Docket Item 42 at 13-14

(alterations, citation, and internal quotation marks omitted). In his second amended

complaint, Vito now says that Canzoneri terminated his employment at APA shortly after

Vito “reported [the] single[-]dose reuse issue to the United States Department of Health

& Human Services” and to the UMMC Chief Medical Officer and Surgery Department

Chair.7 Docket Item 44 at ¶¶ 51-52.

As noted above, a plaintiff can allege that he engaged in protected activity for

purposes of an FCA or NYFCA retaliation claim by “show[ing] that [his] investigation

reasonably could have led to an FCA [or NYFCA] action.” Dhaliwal, 752 F. App’x at 100

(alterations omitted). Here, Vito says that he flagged the improper reuse of single-use

medication vials to both the federal government and to UMMC, see Docket Item 44 at

¶¶ 51-52, and that his employment at APA then was almost immediately terminated,

see id. at ¶ 54. And Vito says that after his termination, he met with federal and state

investigators, presumably to inform them about his belief that Canzoneri was

fraudulently billing the federal and state government. See id. at ¶¶ 61-64 (alleging that

7 In his second amended complaint, Vito again alleges that he told UMMC’s

Surgery Department Chair that Canzoneri “insisted Vito continue to pay $250 per

procedure to [] Canzoneri, even though Canzoneri would no longer be scrubbing in for

such procedures.” Docket Item 44 at ¶ 53. But as this Court noted in its prior decision,

Vito has not explained how that demand for improper payments from him relates to any

false claims submitted to the federal or state government. See Docket Item 42 at 14.

Vito met with various federal and state officials, including “investigator[s] at the New

York Attorney General Medicaid Fraud Unit’s office”).

So Vito says that he raised concerns about Canzoneri’s improper reuse of single-

use medication vials and was immediately fired. And Vito says that both before and

after his termination, he brought those concerns to federal and state officials who

investigate fraud on the federal and state governments. Drawing every inference in

Vito’s favor, as it must at this stage, see Trs. of Upstate N.Y. Eng’rs Pension Fund, 843

F.3d at 566, this Court concludes that Vito has shown that his investigation “reasonably

could have led to an FCA [or NYFCA] action,” Dhaliwal, 752 F. App’x at 100 (alterations

and citation omitted). Vito therefore has sufficiently alleged retaliation claims against

APA under the FCA and NYFCA.8

8 Although APA and Canzoneri argue that Vito has not established that he

engaged in protected activity, they do not address whether he has alleged the

remaining elements of a retaliation claim with respect to his termination. This Court

therefore assumes that APA was aware about Vito’s protected activity. And the short

temporal gap between Vito’s complaints and his termination “support an inference of

retaliation” for purposes of his FCA and NYFCA retaliation claims. See, e.g., U.S. ex

rel. O’Toole v. Cmty. Living Corp., 2020 WL 2512099, at *12 (S.D.N.Y. May 14, 2020).

This Court agrees with APA and Canzoneri, however, that Vito has not alleged a

viable retaliation claim with respect to the suspension of his hospital privileges at

UMMC. See Docket Item 44 at ¶ 98. As noted above, a plaintiff alleging a retaliation

claim must allege that his “employer took adverse action against him because he

engaged in [] protected activity.” Dhaliwal, 752 F. App’x at 100 (emphasis added). But

Vito says that UMMC, not APA or Canzoneri, suspended his hospital privileges. See

Docket Item 44 at ¶ 98. And Vito offers nothing more than his own speculation that

either Canzoneri or APA was somehow involved in that suspension. See, e.g., Docket

Item 44-1 (detailing Vito’s “beli[ef that] his summary suspension was instigated by . . .

Canzoneri as retaliation”). Without some further factual basis for attributing UMMC’s

actions to his employer, Vito cannot maintain a retaliation claim based on UMMC’s

suspension of his privileges.

Vito cannot, however, maintain his retaliation claims against Canzoneri. Other

courts in this Circuit have concluded that “there is no individual liability for retaliation

under” the FCA or NYFCA. See, e.g., McKoy v. Uliss, 2017 WL 2963456, at *2

(E.D.N.Y. July 11, 2017) (collecting cases). And while some courts have suggested that

an individual might be liable as the alter ego of a corporation, see, e.g., U.S. ex rel. v.

Brumfield v. Narco Freedom, Inc., 2018 WL 5817379, at *3 (S.D.N.Y. Nov. 6, 2018)

(collecting cases), Vito’s bare assertion that APA is “the alter ego of Canzoneri,” Docket

Item 44 at ¶ 23, falls well short of pleading the facts necessary to pursue that theory of

liability. See Brumfield, 2018 WL 5817379, at *3-4 (outlining standard for alter ego

liability); see also McKoy, 2017 WL 2963456, at *4 (dismissing claim against individual

where “all [the] plaintiff has alleged is that [the defendant] controls his corporation”).

Vito’s retaliation claims against Canzoneri therefore are dismissed.

CONCLUSION

For the reasons stated above, APA’s and Canzoneri’s motion to dismiss, Docket

Item 55, is GRANTED in part and DENIED in part. Vito’s FCA and NYFCA retaliation

claims against APA may proceed, but his remaining claims are dismissed. The Clerk of

the Court shall terminate Canzoneri as a defendant to this case.

SO ORDERED.

Dated: June 20, 2023

Buffalo, New York

/s/ Lawrence J. Vilardo

LAWRENCE J. VILARDO

UNITED STATES DISTRICT JUDGE