SHILOH v. PHILADELPHIA VASCULAR INSTITUTE LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES OF AMERICA, : CIVIL ACTION

ex rel. AARON SHILOH, M.D., FSIR :

Plaintiff : NO. 18-5458

:

v. :

:

PHILADELPHIA VASCULAR :

INSTITUTE LLC, et al. :

Defendants :

NITZA I. QUIÑONES ALEJANDRO, J. MARCH 29, 2024

MEMORANDUM OPINION

INTRODUCTION

Realtor Dr. Aaron Shiloh filed this qui tam1 action against Defendants James McGuckin,

M.D., (“Defendant McGuckin”) and Philadelphia Vascular Institute, LLC, asserting violations of

the False Claims Act (the “FCA”), 31 U.S.C. § 3729 et seq. On February 28, 2023, the United

States of America2 (the “Government”) filed a notice of intervention, indicating its decision to

intervene on behalf of the relator, (ECF 27), and on May 1, 2023, filed the complaint in

intervention against Defendant McGuckin and his practices and management companies,3

1 “Qui tam is short for the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte

sequitur, which means ‘who pursues this action on our Lord the King’s behalf as well as his own.’” Vt.

Agency of Nat. Res. v. United States ex rel. Stevens, 529 U.S. 765, 768 n.1 (2000). A private person, called

a relator, brings an action “’for the person and for the United States Government against’ the alleged false

claimant, ‘in the name of the Government.’” Id. at 769 (quoting 31 U.S.C. § 3730(b)(1)).

2 The Government brings this action on behalf of the United States Department of Health and Human

Services (“HHS”); the Centers for Medicare & Medicaid Services (“CMS”), which administers the

Medicare program (“Medicare”), 42 U.S.C. §§ 1395 et seq.; and the United States Office of Personnel

Management (“OPM”), which administers the Federal Employee Health Benefits Program (“FEHBP”).

3 The Government additionally brings this action against Defendants Philadelphia Vascular Institute,

LLC (“Defendant PVI”) and Pennsylvania Vascular Institute, PC (“Defendant PA PC”) (collectively,

“Management Defendants”); and Lehigh Valley Vascular Institute LLC (“Defendant LVVI”), PA Vascular

(collectively “Defendants”), asserting claims under the FCA for, inter alia, knowingly submitting

or causing the submission of false claims for reimbursement to federal health care programs for

medically unnecessary invasive vascular procedures, knowingly making false statements to the

government related to those procedures, and violating the Anti-Kickback Statute, 42 U.S.C. §§

1320a-7b(b), (g), (ECF 32).

Before the Court is Defendants’ motion to dismiss filed pursuant to Federal Rule of Civil

Procedure (“Rule”) 12(b)(6) and Rule 9(b). (ECF 36). The Government opposes the motion.

(ECF 40). The issues raised in the motion have been fully briefed and are ripe for disposition.4

For the reasons set forth, Defendants’ motion is denied.

BACKGROUND

When ruling on a motion to dismiss, this Court must accept as true the well-pleaded

allegations in the Government’s complaint. See Fowler v. UPMC Shadyside, 578 F.3d 203, 210

(3d Cir. 2009). The facts relevant to the motion to dismiss are summarized as follows:5

Overview of Medicare Payment System6

Medicare is a federal program administered by the Centers for Medicare &

Medicaid Services (“CMS”), an agency within the Department of Health and

Human Services (“HHS”). The Medicare program consists of four parts: A, B, C,

and D. Only Part B is relevant here. Medicare Part B covers the cost of outpatient

care, including physician services and ancillary services, furnished by physicians

and other providers and suppliers.

Institute LLC (“Defendant PAVI”), Peripheral Vascular Institute of Philadelphia, LLC (“Defendant

PVIP”), and Main Line Vascular Institute LLC (“Defendant MLVI”) (collectively, “Defendant Practices”).

The Government alleges Defendant McGuckin owns 100% of Management Defendants, and that Defendant

PA PC owns 100% of Defendant Practice.

4 This Court has also considered Defendants’ reply. (ECF 41).

5 These facts are drawn from the Government’s complaint in intervention. (ECF 32).

6 (See Compl., ECF 32, at § III (B)).

Medicare pays only for services that are actually rendered and which are

“reasonable and necessary for the diagnosis or treatment of illness or injury or to

improve the functioning of a malformed body member.” 42 U.S.C. §

1395y(a)(1)(A). To this end, Medicare providers must assure that their services are

rendered “economically and only when, and to the extent, medically necessary,”

and that their services are “of a quality which meets professionally recognized

standards of health care.” 42 U.S.C. §§ 1320c-5(a)(l)-(2).

After performing a Part B service, providers are required to submit a claim

form to the CMS certifying, among other things, that “the services shown on this

form were medically indicated and necessary for the health of the patient[.]” See

CMS Form 1500. Relying on the veracity of these certifications, the CMS makes

Medicare payments retroactively, i.e., they reimburse Part B providers. When

submitting a claim form, the provider includes a five-digit code (“CPT code”) that

identifies, for example, the diagnosis, services rendered, and the unique billing

identification number. Providing accurate CPT codes on the claim form is a

condition of payment from Medicare.

As a general matter, Medicare Part B covers 80% of the reasonable cost of

medical services; the remaining 20% is owed by the beneficiary as a copayment

obligation. Except in rare circumstances, providers are required to make a

reasonable collection effort for the full 20% copayment from Medicare

beneficiaries or their secondary insurers.

Factual Allegations

Defendant McGuckin is an interventional radiologist. He owns and

operates multiple vascular practices across the country, including the Defendant

Practices and Management Defendants. Between 2016 and 2019, Defendant

McGuckin and the Defendant Practices were providing endovascular services to

Medicare and FEHBP beneficiaries. Defendant McGuckin has been registered as

a Medicare provider in Pennsylvania since at least 2010. Defendant Practices and

Management Defendants are also registered Medicare providers in Pennsylvania.

Defendant McGuckin instructed physicians at Defendant Practices to screen

all dialysis patients for Peripheral Artery Disease (“PAD”).7 He also instructed

physicians to perform intravenous ultrasounds on every Medicare patient instead of

using less invasive diagnostic measures. Defendants also scheduled follow up tests

of asymptomatic patients at regular intervals. Defendants performed most

procedures, including angioplasties, atherectomies, and stent implantations,

without any prior non-invasive imaging or assessment of relevant medical histories

7 Peripheral Artery Disease (“PAD”) is the narrowing or blockage of peripheral arteries and

the consequent reduction of blood flow to the legs. The standards of care for the treatment of PAD

depend almost entirely on a patient’s symptoms. The Government alleges at length the typical

causes, escalation, and symptoms of PAD, as well as the medical standard of care and typical

treatment approaches. (See Compl., ECF 32, at § IV (A)).

and symptoms to justify these invasive procedures. Defendant McGuckin and his

staff also did not evaluate patients preoperatively. According to the Government,

Defendant McGuckin’s records confirm that he often overestimated the severity of

patients’ artery blockage to justify interventions. Patients on whom Defendant

McGuckin performed an angiogram of one leg routinely were brought back for an

angiogram of both legs within a few weeks, regardless of any medical indication.

To convince patients to undergo these procedures, Defendant McGuckin would tell

them that the procedures were necessary to “stop the chop,” i.e., leg amputation.

Defendant McGuckin traveled throughout the state to perform these procedures.

According to the Government, a review of Defendants’ records further indicates

that in some cases, Defendant McGuckin billed Medicare for procedures for which

there was no evidence he performed the procedures at all.8

The Government contends that data shows that for the years 2016-2020,

despite having an average practice size and number of patients, Defendant

McGuckin was: ninth out of over 6,500 practitioners in Medicare Part B

reimbursements for the four PAD procedure codes examined in the Government’s

statistical analysis; thirteenth in the number of patients billed for the codes at issue;

second for amounts paid for these codes; and fourth in the number of these

procedures performed. In Pennsylvania, McGuckin was first in nearly all of these

categories. Defendants PVIP and PAVI are also outliers on two of the sampled

CPT codes.

The United States paid Defendants at least $6.5 million for over 500 false

claims related to the four CPT codes the Government sampled, by submitting

claims of reimbursement to Medicare and the FEHBP for PAD procedures that

were not medically necessary and/or were not properly documented.

Defendants also inappropriately waived Medicare copayments, by failing to

satisfy the conditions established by Medicare to support those copayment waivers.

Defendants advised patients that they would not have to pay for Defendants’

services and that the insurance payments, including Medicare payments, would be

treated as payment in full. At times, however, Defendants collected copayments

from secondary insurances but regularly did not collect copayments from federal

beneficiary patients who lacked supplemental coverage.

Defendants utilized a “Charity Policy” to waive patients’ financial

responsibility, i.e., copayments. Specifically, the Charity Policy provided that low-

income patients must complete an application for financial assistance, including

federal tax returns, and submit the application prior to the scheduled date of their

procedure to allow for review by Defendants. Pursuant to the Charity Policy,

Defendants were supposed to send a letter of confirmation with the results of the

review and place a copy in the patient’s chart. While the waiver of copayments is

permitted in certain circumstances, Defendants waived copayments without

8 The Government alleges specific facts of ten sample patients to demonstrate Defendants’ treatment

practices and routines. (See Compl., ECF 32, at pp. 42-60).

following their own Charity Policy guidelines which required approving the

application prior to a patients’ procedure and/or confirming their low-income

status. In doing so, Defendants waived copayments in violation of federal program

guidelines.9

LEGAL STANDARD

When considering a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6),

the court “must accept all of the complaint’s well-pleaded facts as true, but may disregard any

legal conclusions.” Fowler, 578 F.3d at 210. The court must determine “whether the facts alleged

in the complaint are sufficient to show that the plaintiff has a ‘plausible claim for relief.’” Id. at

211 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)). The complaint must do more than

merely allege the plaintiff’s entitlement to relief; it must “show such an entitlement with its facts.”

Id. (citations omitted). “[W]here the well-pleaded facts do not permit the court to infer more than

the mere possibility of misconduct, the complaint has alleged—but it has not ‘shown’—‘that the

pleader is entitled to relief.’” Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)) (alteration

omitted). “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.

at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). “Threadbare recitals of the

elements of a cause of action, supported by mere conclusory statements do not suffice.” Id. To

survive a motion to dismiss under Rule 12(b)(6), “a plaintiff must allege facts sufficient to ‘nudge

[his] claims across the line from conceivable to plausible.’” Phillips v. Cnty. of Allegheny, 515

F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 570).

9 The Government alleges specific facts related to two sample patients whose copayments were

completely written off as “charity,” despite not having any documentation to support the “Charity Policy”

write off. (See Compl., ECF 32, at pp. 70-72).

Rule 9(b) requires that, “[i]n alleging fraud or mistake, a party must state with particularity

the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions

of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b); Craftmatic Sec. Litig. v.

Kraftsow, 890 F.2d 628, 645 (3d Cir. 1989) (“[Rule] 9(b) requires plaintiffs to plead the

circumstances of the alleged fraud with particularity to ensure that defendants are placed on notice

of the precise misconduct with which they are charged, and to safeguard defendants against

spurious charges of fraud.” (internal quotation marks omitted)).

The United States Court of Appeals for the Third Circuit (“Third Circuit”) has made clear

that Rule 9(b)’s particularity requirement necessitates more than “[a] mere inference of

illegality[.]” United States ex rel. Bookwalter v. UPMC, 946 F.3d 162, 176 (3d Cir. 2019); see

also United States ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 301 n.9 (3d Cir. 2011)

(“[P]laintiffs must plead FCA claims with particularity in accordance with Rule 9(b).”). That is,

“a [plaintiff] must establish a strong inference that the false claims were submitted.” Bookwalter,

946 F.3d at 176 (internal citations and quotation marks omitted). “Rule 9(b)’s particularity

requirement requires a plaintiff to allege ‘all of the essential factual background that would

accompany the first paragraph of any newspaper story—that is, the who, what, when, where, and

how of the events at issue.’” Id. (quoting United States ex rel. Moore & Co., P.A. v. Majestic Blue

Fisheries, LLC, 812 F.3d 294, 307 (3d Cir. 2016)). “Rule 9(b) does not require [plaintiffs] to plead

anything more, such as the date, time, place, or content of every single allegedly false Medicare

claim.” Id.

Considering that “the purpose of Rule 9(b) is to provide defendants with fair notice of the

plaintiffs’ claims,” the Third Circuit has held that to survive a motion to dismiss and satisfy Rule

9(b), a plaintiff asserting claims under the FCA “must provide particular details of a scheme to

submit false claims paired with reliable indicia that lead to a strong inference that claims were

actually submitted.” Foglia v. Renal Ventures Management, LLC, 754 F.3d 153, 158-59 (3d Cir.

2014) (citations omitted). “Describing a mere opportunity for fraud will not suffice,” and, instead,

a plaintiff must provide “sufficient facts to establish a plausible ground for relief.” Id. at 159

(citations omitted). However, a plaintiff need not “identify a specific claim for payment at the

pleading stage of the case to state a claim for relief.” Id. at 156 (quoting Wilkins, 659 F.3d at 308).

DISCUSSION

In its complaint, the Government alleges that Defendants: (1) submitted false claims for

services that were not medically necessary, not performed, and/or were not properly documented

(Count I) and made or used false statements in doing so (Count II); (2) submitted claims tainted

by kickbacks in the form of copayment waivers in violation of the Anti-Kickback Statute (Count

III) and made or used false statements in doing so (Count IV); (3) received reimbursements from

the United States under mistake of fact (Counts V-VI); and (5) were unjustly enriched by their

fraudulent conduct (Count VII).

Defendants move to dismiss the Government’s complaint arguing that: (1) the complaint

is an improper “shotgun” pleading; (2) the Government’s claims based on Plaintiffs’ alleged

performance of medically unnecessary procedures (Counts I, II, IV, and VI) are insufficiently pled

because, at most, the Government pleads a medical disagreement; and (3) the Government’s Anti-

Kickback Statute claims (Counts III, IV, and VI) were not pled with sufficient specificity. These

arguments are addressed in turn.

Defendants’ Shotgun Pleading Argument

Defendants argue that the Government’s complaint is an improper “shotgun” pleading

because it contains multiple counts that adopt the allegations of all preceding paragraphs and

asserts all claims against all Defendants, making it difficult for Defendants to discern which factual

allegations support which cause of action, and which Defendants took which allegedly improper

actions. Defendants are mistaken.

A shotgun pleading fails to provide a defendant notice of the claims asserted. Rosenberg

v. C.R. Bard, Inc., 387 F. Supp. 3d 572, 582 (E.D. Pa. 2019) (citing Hynson v. City of Chester

Legal Dep’t., 864 F.2d 1026, 1031 n.13 (3d Cir. 1988)). A prototypical shotgun complaint is one

that “offer[s] vague and conclusory factual allegations in an effort to support a multiplicity” of

claims against multiple defendants. Bartol v. Barrowclough, 251 F. Supp. 3d 855, 860 (E.D. Pa.

2017) (quoting Ebrahimi v. City of Huntsville Bd. of Educ., 114 F.3d 162, 164 (11th Cir. 1997)).

Here, although each count of the Government’s complaint incorporates by refence all

previous paragraphs, the Factual Background section of the complaint is divided into sections that

clearly describe the factual allegations that are relevant to each claim, which implicate all

Defendants. For example, Section V provides the facts underlying the Government’s False Claims

Act allegations premised on the submission of claims for medically unnecessary procedures. (See

Compl., ECF 32, at § V). Similarly, Section VI of the complaint provides the facts underlying the

Government’s False Claims Act allegations premised on violations of the Anti-Kickback Statute.

(Id. at § VI). Despite the incorporation of all the previously alleged facts into each count, the facts

alleged are neither vague nor conclusory and, sufficiently, put Defendants on notice of the specific

allegations and claims against them. See Weiland v. Palm Beach Cnty. Sheriff's Off., 792 F.3d

1313 (11th Cir. 2015) (reversing the dismissal of claims that incorporated previous paragraphs

because “the task of figuring out which” paragraphs of the complaint were relevant to each claim

was “hardly a task at all” when the complaint was organized into subsections).

Further, the fact that all counts in the complaint are asserted against all Defendants does

not invalidate the complaint. “[W]here multiple defendants are involved, the complaint should

inform each defendant of the nature of the alleged participation in the fraud.” Tredennick v. Bone,

323 F. App’x. 103, 105 (3d Cir. 2008). Here, the complaint alleges a scheme among Defendants

in which Defendant McGuckin performed unnecessary medical procedures, billed Medicare and,

in some instances, failed to collect the mandatory copayments owed. Defendant McGuckin’s

alleged misconduct occurred during his medical practice at Defendant Practices. Defendant

Practices are allegedly owned by Management Defendants, which are, in turn, solely owned by

Defendant McGuckin. As such, the Defendant Practices and Management Defendants acted in

concert with Defendant McGuckin, therefore, the factual allegations of the scheme charged apply

to all Defendants. Under these circumstances, this Court finds that the complaint informs each

Defendant of their alleged participation in the fraud scheme and is not an improper shotgun

pleading.

Plaintiff’s False Claims Act Claims

At Counts I, II, V, and VII of the complaint, the Government asserts claims under the False

Claims Act (“FCA”) premised on Defendants’ submission of Medicare claims for reimbursement

for services that were either not medically necessary, or not performed. The FCA imposes liability

upon a person who knowingly presents or causes to be presented a false or fraudulent claim for

payment or approval, or who knowingly makes, uses, or causes to be made or used a false record

or statement material to a false or fraudulent claim. 31 U.S.C. § 3729(a)(1)(A)-(B); United States

ex rel. Greenfield v. Medco Health Sols., Inc., 880 F.3d 89, 94 (3d Cir. 2018). To state an FCA

claim, a plaintiff must allege facts sufficient to plausibly show causation, falsity, knowledge

(scienter), and materiality. United States ex rel. Petratos v. Genentech Inc., 855 F.3d 481, 487 (3d

Cir. 2017) (citing Universal Health Servs., Inc. v. United States, 579 U.S. 176, 182 (2016)).

Defendants argue that the Government has not met its heightened pleading burden required

by Rule 9(b) for these claims because it has not pled facts sufficient to show both falsity and

scienter. Specifically, Defendants contend that the Government has not and cannot meet this

heightened burden because it has pled, at most, a difference in medical opinions that cannot form

the basis of a false claim and has failed to plead that Defendants’ purported medical opinion was

objectively false.

At the outset, Defendants’ argument — that the Government has pled nothing more than

medical disagreements which cannot form the basis of a false claim — has been rejected by the

Third Circuit. In United States ex rel. Druding v. Care Alternatives, the defendant provider

successfully argued at summary judgment that the plaintiff had proffered nothing more than a mere

difference in medical opinion between physicians to meet the plaintiff’s burden with respect to

falsity. 952 F.3d 89, 94 (3d Cir. 2020). In reversing the district court’s grant of summary judgment

and rejecting the very argument presented by Defendants in this case, the Third Circuit held:

In analyzing the statute’s text, we find the premise of the District

Court’s holding — that a “mere difference of opinion” is insufficient

to show FCA falsity — is at odds with the meaning of “false” under

the statute. We also conclude that the District Court’s “objective”

falsity standard improperly conflates the elements of falsity and

scienter, inconsistent with the application of the FCA.

Id. at 95. Therein, the Third Circuit also rejected the same “objectively false” argument being

made by Defendants here, holding:

According to the District Court, a medical expert’s opinion is false

for purposes of FCA liability only when there is evidence of factual

inaccuracy. In other words, opinions being subjective, a differing

medical conclusion regarding a patient’s prognosis alone is not

enough to show the certifying physician’s determination of terminal

illness was factually incorrect.

We disagree with the District Court’s decision to circumscribe FCA

falsity to findings of factual falsity. This runs contrary to the cases

in this Court, which have recognized falsity to include legal falsity.

In other words, our cases instruct that FCA falsity simply asks

whether the claim submitted to the government as reimbursable was

in fact reimbursable, based on the conditions for payment set by the

government.

Id. at 97 (internal citations omitted). Consistent with this decision, this Court rejects Defendants’

arguments.

Defendants also argue that the Government has failed to allege facts sufficient to show

falsity because it has not alleged that “Defendants falsified the patient medical records or

diagnoses,” and has not alleged how the particular medical procedures were “outside a particular

medical standard of care. . . .” (Defs.’ Mot., ECF 36-1, at pp. 16-17). Defendants, however,

misconstrue the falsity pleading requirement.

“There are two categories of false claims under the FCA: a factually false claim and a

legally false claim.” Wilkins, 659 F.3d at 305. “A claim is factually false when the claimant

misrepresents what goods or services it provided to the Government.” Id. A claim is legally false

when a claimant knowingly falsely certifies that it has complied with a statute or regulation,

compliance with which is a condition or precondition for government payment. Id.; see also

Petratos, 855 F.3d at 486. The second category, legally false claims, is subcategorized into two

theories of liability: “express false certification” and “implied false certification.” United States

ex rel. Sirls v. Kindred Healthcare, Inc., 469 F. Supp. 3d 431, 445 (E.D. Pa. 2020).

“Under the ‘express false certification’ theory, an entity is liable under the FCA for falsely

certifying that it is in compliance with regulations which are prerequisites to Government payment

in connection with the claim for payment of federal funds.” Wilkins, 659 F.3d at 305 (quoting

Rodriguez v. Our Lady of Lourdes Med. Ctr., 552 F.3d 297, 303 (3d Cir. 2008)). Implied false

certification liability “attaches when a claimant seeks and makes a claim for payment from the

Government without disclosing that it violated regulations that affected its eligibility for payment.”

Id.; see also Universal Health Servs., 579 U.S. at 181. For liability to attach, the defendant’s false

certification “about its compliance with a legal requirement [must be] ‘material to the

Government’s payment decision.’” Greenfield, 880 F.3d at 94 (quoting Universal Health Servs.,

579 U.S. at 181). “Materiality” is defined as “having a natural tendency to influence, or be capable

of influencing, the payment or receipt of money.” 31 U.S.C. § 3729(b)(4).

Here, though the Government alleges both factual and legal falsity claims, it appears that

Defendants only challenge the Government’s legal falsity claims, i.e., those premised on the lack

of medical necessity.10 (See Defs.’ Mot., ECF 36-1, at p. 16). In FCA cases alleging lack of

medical necessity, certification to the government11 is “false simply ‘if the procedure was not

reasonable and necessary under the government's definition of the phrase.’” Druding, 952 F.3d at

97 (quoting United States ex rel. Polukoff v. St. Mark’s Hosp., 895 F.3d 730, 743 (10th Cir. 2018)

(finding that plaintiff-physician’s opinion that defendant-cardiologist’s procedures were not

“reasonable and necessary” was a cognizable allegation as to whether the cardiologist’s

reimbursement claims were “false”)); see also United States ex rel. Tra v. Fesen, 403 F. Supp. 3d

949, 963 (D. Kan. 2019) (finding that the allegation that defendants were “incorrectly diagnosing

10 Notably, the Government pled factually false claims by expressly alleging that Defendants billed

Medicare for procedures without any evidence that Defendant McGuckin performed those procedures. (See

e.g., Compl., ECF 32, at ¶¶ 141, 148, 168, 174, 187, 194).

11 Section 424.24 requires that all claims for “covered medical and other health services furnished

by providers” include a certification that “[t]he services were medically necessary[.]” 42 C.F.R. §

424.24(g)(1).

patients or certifying that treatments were medically necessary when they actually were not” was

sufficient to allege a claim for a false statement under § 3729(a)(1)(B)).

Here, the Government cites to the purported well-established medical standards of care for

the treatment of PAD, offering authoritative guidelines established by multiple professional

societies. (See Compl., ECF 32, at ¶¶ 85-110, 115-16). Accepting these allegations as true at this

stage of the litigation, as this Court must, these standards establish the proper course of medical

care for the treatment of PAD, a course allegedly not followed by Defendant McGuckin. The

Government alleges that Defendants regularly failed to adhere to these standards and further

submitted claims that included certifications that the procedures performed were medically

necessary, when, in fact, they were not. (See id. at ¶¶ 132-140) (alleging that Defendants failed to

properly assess patients’ medical history and symptoms, exhaust non-invasive PAD treatments,

evaluate patients preoperatively, and provide reasonable medical notes to support a need for

intervention); (see also id. at ¶¶ 144-213) (alleging specific facts pertaining to ten patients who

received invasive PAD treatments despite having no symptoms, treatment histories, and/or pre-

operative testing to support the medical necessity of the invasive PAD interventions they

received).12 The complaint further alleges that Defendants were outliers compared to medical

providers nationwide, ranking amongst the top practitioners and providers with respect to the

number of procedures performed, reimbursements submitted, and amounts billed for the sampled

CPT codes. (See id. at ¶¶ 215-17). This Court finds that these allegations are sufficient to plausibly

assert FCA claims premised on legal falsity. See, e.g., Polukoff, 895 F.3d at 743-44 (finding that

complaint alleging that defendant performed an unusually large number of cardiac procedures,

12 Defendants offer factual rebuttals in an effort to demonstrate that the procedures rendered were

medically necessary. At this stage of the litigation, however, the Court must accept all facts in the complaint

as true, so factual disputes are premature. See United States ex rel. Spay v. CVS Caremark Corp., 913 F.

Supp. 2d 125, 163 n.21 (E.D. Pa. 2012).

violating both industry and hospital guidelines, where other doctors objected to said practice, met

the pleading burden under Rules 12(b)(6) and 9(b), even where defendant asserted procedures were

appropriate for other indications and to prevent stroke); see also Tra, 403 F. Supp. 3d at 960

(finding that the Government sufficiently pled that treatments and prescriptions were false as

medically unnecessary by alleging, inter alia, that defendant’s number of prescriptions was high,

certain prescriptions did not meet medically appropriate treatment standards, and Medicare does

not pay for claims unless they are medically necessary).

Defendants also argue that the Government does not plead sufficient facts to plausibly

show that Defendants knowingly submitted false claims for reimbursement. Defendants are

mistaken. The FCA defines “knowing” and “knowingly” to mean that a person has “actual

knowledge of the information,” “acts in deliberate ignorance of the truth or falsity of the

information,” or “acts in reckless disregard of the truth or falsity of the information.” 31 U.S.C. §

3729(b)(1)(A); see also Universal Health Servs., 579 U.S. at 182. Importantly, the FCA

“require[s] no proof of specific intent to defraud.” 31 U.S.C. § 3729(b)(1)(B). Additionally, “[t]he

FCA’s scienter element refers to [a defendant’s] knowledge and subjective beliefs — not to what

an objectively reasonable person may have known or believed.” United States ex rel. Schutte v.

Supervalu, Inc., 143 S. Ct. 1391, 1399 (2023).13

13 Relying on the holding in Ruan v. United States, 597 U.S. 450 (2022), Defendants argue that the

Government does not allege that Defendant McGuckin subjectively believed that he was violating standards

of care or that he knew that the services were not medically necessary. In Ruan, the Supreme Court of the

Unites States (the “Supreme Court”) rejected an objective standard and adopted a subjective standard,

holding that a physician may not be convicted of criminal controlled substances violations unless the

government proves that he knew or intended that his conduct was unauthorized. 597 U.S. at 467.

Defendants’ reliance on Ruan is, however, misplaced. The Supreme Court’s holding in Ruan applies to the

mens rea element of the criminal provision of the Controlled Substance Act and is not applicable in the

civil context, including in FCA cases. See United States v. Spivack, 2022 WL 4091669, at *1 n.1 (E.D. Pa.

Sept. 6, 2022) (“We reject [plaintiffs’] argument [that] the mens rea element the Court found in Ruan

‘should be the same’ in the civil context.”). Accordingly, the Government need not have alleged that

Defendant McGuckin knew he was violating the standard of care and performing medically unnecessary

treatments.

In the complaint, the Government expressly outlines the Medicare standards that make

Medicare providers, like Defendants, responsible for knowing locally acceptable standards of

practice. (Compl., ECF 32, at ¶ 34). The Government also alleges that, as a condition of becoming

a Medicare provider, a Part B provider must certify that they agree to comply with the Medicare

laws, understand the legal conditions of reimbursement, and that they “will not submit claims with

deliberate ignorance or reckless disregard of their truth or falsity.” (Id. at ¶ 35 (quoting CMS Form

855b and CMS Form 855i)). Against this backdrop of the applicable standards, the Government

alleges that:

[Defendant] McGuckin has admitted in writing to, and been

personally sanctioned for, conducting invasive vascular procedures,

including angioplasty and stenting, without first conducting the

required patient assessments to ensure the procedures were

medically necessary, and without proper documentation of the same.

He has also confirmed in writing and under oath his personal

knowledge that submitting a claim to Medicare that is not

sufficiently documented as being medically necessary is a false

claim subject to damages and penalties under the FCA.

***

McGuckin’s admissions, in writing and in testimony given under

oath, coupled with his self-reporting that his PAD procedures are on

patients who do not meet the criteria for such invasive procedures,

demonstrate that Defendants’ conduct was knowing under the FCA.

(Id. at ¶¶ 221, 230); (see also id. at ¶¶ 222-229) (providing specific examples of Defendant

McGuckin’s knowledge of Medicare’s medical necessity and documentation requirements from

previous sanctions and FCA settlements). Defendant McGuckin’s knowledge is further imputed

to the other Defendants, as the Government alleges that Defendant McGuckin sought the

reimbursements from the United States through the Defendant Practices, with the knowledge and

under the management of the Management Defendants, all of which are owned by Defendant

McGuckin. In light of these allegations, the Government has met its pleading burden with respect

to the requisite knowledge/scienter.

In sum, this Court finds that the Government has satisfied its heightened Rule 9(b) pleading

burden with respect to falsity and knowledge and has sufficiently pled its FCA claims based on

Defendants’ alleged performance of medically unnecessary procedures and Defendants’

submission of claims for procedures for which there is no record of performance.

Anti-Kickback Claims

At Counts III, IV, and VI of the complaint, the Government alleges that Defendants

violated the Anti-Kickback Statute by waiving the required Medicare copayment from their

patients. Defendants argue that the Government has not pled facts sufficient to support the

kickback claims because the allegations are primarily based upon “information and belief.” A

careful review of the complaint, however, belies Defendants’ argument. The Government

expressly alleges, without qualifying with the phrase “information and belief,” that Defendants

submitted claims to Medicare where patients did not pay copayments. (See e.g., Compl., ECF 32,

at ¶ 255) (“Patient RD paid nothing for these procedures.”); (id. at ¶ 265) (“Patient MH paid

nothing for these procedures.”).

Defendants also argue that the alleged waivers were not improper because they were issued

under Defendants’ “Charity Policy.” As alleged in the complaint, Defendants Charity Policy

allows for waiver of copayments under certain circumstances for certain patients, which the

Medicare law permits under limited circumstances. The Government, however, specifically

alleges that patients received copayment waivers under the Charity Policy without any

documentation to support said waiver, directly in violation of Defendants’ own policies and

Medicare laws. (See id. at ¶¶ 246-47, 251).14 As such, the Government has met its burden at the

pleading stage with respect to the Anti-Kickback Statute violation claims.

CONCLUSION

For the reasons stated herein, Defendants’ motion to dismiss is denied. The Government

has pled sufficient facts to support its False Claims Act, Anti-Kickback Statute, and unjust

enrichment claims. An Order consistent with this Memorandum Opinion follows.

NITZA I. QUIÑONES ALEJANDRO, U.S.D.C. J.

14 Defendants offer factual rebuttals in an effort to demonstrate that the waiver of copayments was

proper for the sample patients that the Government alleged. At this stage of the litigation, however, the

Court must accept all factual allegations as true, so factual disputes are premature. See Spay, 913 F.

Supp. 2d at 163 n.21.