# United States of America v. Care Services Management LLC

> District Court, M.D. Tennessee · August 23, 2022

URL: https://www.frixlaw.com/law-library/cases/10438147

## Case

- **Court:** District Court, M.D. Tennessee
- **Decided:** August 23, 2022
- **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/10438147

## How later opinions describe it (automated extraction)

- discussing rationales for considering government knowledge as part of scienter inquiry under the FCA

## Opinion text

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION

UNITED STATES OF AMERICA and the )
STATES OF GEORGIA, LOUISIANA, )
TENNESSEE, and VIRGINIA ex rel. )
GREGORY FOLSE, )
)
Plaintiffs, )
)
v. ) Case No. 3:17-cv-1478
) Judge Aleta A. Trauger
MARQUIS “MARK” NAPPER, JOSHUA )
KILGORE, DANIEL BIRD, CARE )
SERVICES MANAGEMENT LLC, )
MARQUIS HEALTH SYSTEMS LLC, )
MARQUIS MOBILE DENTAL SERVICES )
LLC, and SALLY B. DALY DDS LLC )
d/b/a FLEUR DE LIS MOBILE DENTAL, )
)
Defendants. )

MEMORANDUM

Relator Gregory Folse has filed a Motion to Strike Certain Affirmative Defenses from the
[Care Services Management, LLC (“CSM”)] Defendants’ Answer to Relator’s Second Amended
Complaint (Doc. No. 165), and plaintiffs Tennessee and Louisiana have filed a Motion to Strike
Certain Affirmative Defenses from the CSM Defendants’ Answer to Amended Complaint in
Intervention (Doc. No. 167). The CSM-affiliated defendants—that is, CSM, Marquis “Mark”
Napper, Joshua Kilgore, Daniel Bird, Marquis Health Systems, LLC, and Marquis Mobile Dental
Services, LLC—have filed a Response (Doc. No. 169) addressing both motions, and Folse has
filed a Reply (Doc. No. 172). For the reasons set out herein, each motion will be granted in part
and denied in part.
I. BACKGROUND
A. Nature of the Case
This is a healthcare fraud action originally filed by Folse pursuant to the qui tam provisions
of the False Claims Act (“FCA”)1 and a few state-level counterparts. The details of the alleged

scheme—and the features of the Medicaid program on which the scheme is premised—can be
found in the court’s memorandum of October 27, 2021. See United States v. Napper, No. 3:17-
CV-1478, 2021 WL 4992651, at *2 (M.D. Tenn. Oct. 27, 2021). In short, Folse and the
governments of Louisiana and Tennessee have alleged that the defendants, who provide dental and
other specialty medical services, engaged in kickbacks related to the Medicaid program’s policy
of increasing the program’s share of financial responsibility for a patient’s long-term care (“LTC”)
based on the patient’s “independent medical expenses” (“IMEs”) accrued in connection with
services that Medicaid does not cover directly. See 42 C.F.R. § 435.725(c)(4). Those allegations
make this case somewhat unique, compared to most Medicaid-based FCA cases, because, unlike
those cases, this case touches on Medicaid’s roundabout method of subsidizing IMEs, not merely

its direct payment of claims for services.
CSM provides IME-eligible specialty services to Medicaid-participating LTC residents
through “provider affiliates” who contract with CSM and work directly with the LTC providers.
(Doc. No. 144 ¶ 65.) The plaintiffs and relator assert that CSM improperly enticed the LTC

1 “[T]he qui tam provision of the FCA” allows a private party—known as a “qui tam relator”—to file a
cause of action “in the name of the United States.” U.S. ex rel. Smith v. Lampers, 69 F. App’x 719, 720 (6th
Cir. 2003) (citing 31 U.S.C. § 3730(b)(1)). The complaint is initially placed under seal, while the United
States has an opportunity to evaluate the relator’s allegations. 31 U.S.C. § 3730(b)(2). The United States
ultimately must either elect to intervene in the case— in which case, it takes over the prosecution of the
claims—or decline to intervene, giving the relator the option to pursue the FCA claims in the name of the
government himself. 31 U.S.C. § 3730(b)(4), (c). Either way, if the claims are ultimately successful, the
relator will be entitled to a share of the recovery, as a reward for his assistance and an enticement for future
potential whistleblowers. 31 U.S.C. § 3730(d).
facilities into such arrangements by offering inducements—most prominently, free services for
some patients and administrative support for the facilities—in exchange for referrals, allegedly in
violation of the federal Anti-Kickback Statute (“AKS”). By statute, “a claim that includes items or
services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes

of subchapter III of chapter 37 of Title 31,’ i.e., the FCA.” U.S. ex rel. Arnstein v. Teva Pharms.
USA, Inc., No. 13 CIV. 3702 (CM), 2019 WL 1245656, at *5 (S.D.N.Y. Feb. 27, 2019) (quoting
42 U.S.C. § 1320a-7b(g)).
Folse filed his initial qui tam Complaint on behalf of the United States, Tennessee,
Louisiana, and Georgia on November 22, 2017. (Doc. No. 1.) The Complaint was served on the
respective named governments, and they began their evaluation of the allegations. On March 13,
2018, the United States formally declined to intervene. (Doc. No. 15.) The state governments,
however, continued looking into the matter. (See Doc. Nos. 17, 19 (seeking and receiving
extension of time to consider intervention).) On December 11, 2018, Folse filed an Amended
Complaint, in which he added claims on behalf of the Commonwealth of Virginia and named some

additional defendants. (Doc. No. 22.) The state governments continued to evaluate the claims, and,
on November 25, 2020, they filed a joint Notice, informing the court that Tennessee and Louisiana
had elected to intervene, but Georgia and Virginia had declined to do so. (Doc. No. 40.) On
February 9, 2021, Folse filed a Notice of Voluntary Dismissal regarding some Georgia and
Virginia-based defendants, with the consent of the various governments, although he did not
otherwise dismiss any claims related to Medicaid in Georgia or Virginia. (Doc. No. 51.)
On March 10, 2021, Tennessee and Louisiana filed a joint Complaint in Intervention. (Doc.
No. 76.) They alleged two “schemes of fraud,” which they referred to as “Scheme One” and
“Scheme Two.” Scheme One involved alleged kickbacks between LTC facilities and the
defendants, in the form of free services provided to (or for the benefit of) LTC facilities. (Id. ¶¶
100-01.) Scheme Two involved alleged kickbacks between the defendants and their provider
affiliates, in the form of the affiliates’ providing CSM with a portion of their revenues in exchange
for access to CSM’s client base. (Id. ¶¶ 114–18.) Scheme One and Scheme Two each included

some claims based on conventional Medicaid reimbursement for covered services and some claims
based on IME deductions based on non-covered services. (Id. ¶¶ 119–23.)
The State of Tennessee pleaded four counts. Tennessee Count 1 encompassed Tennessee
Medicaid False Claims Act (“TMFCA”) claims based on the defendants’ knowingly causing false
claims to be submitted to Tennessee’s Medicaid program, known as “TennCare.” (Id. ¶¶ 147–50.)
Tennessee Count 2 was also under the TMFCA but was based on alleged conspiracy. (Id. ¶¶ 151–
53.) Tennessee Counts 3 and 4 were, respectively, common law claims for unjust enrichment and
payment by mistake. (Id. ¶¶ 154–60.) The State of Louisiana pleaded two counts. Louisiana Count
1 was pursuant to the anti-kickback provisions of Louisiana’s Medical Assistance Programs
Integrity Law (“MAPIL”). (Id. ¶¶ 161–63.) Louisiana Count 2 was pursuant to MAPIL’s

provisions regarding false claims. (Id. ¶¶ 164–67.)
B. The Court’s Prior Holdings
Various defendants filed motions to dismiss—five such motions, in total. (Doc. Nos. 89,
93, 95, 106, 121.) On October 27, 2021, the court denied those motions but required Folse and
Louisiana to rectify some relatively minor deficiencies in their pleadings. See Napper, 2021 WL
4992651, at *24. Although some of the issues that the court addressed in response to those motions
are irrelevant to the matters currently under consideration, Folse and the states rely extensively on
other aspects of the court’s holdings in support of their pending requests. Accordingly, the court
will reiterate a few core aspects of its earlier rulings.
As a preliminary matter, the court addressed the relationship between the AKS and the
relevant false claims statutes. As the court has already noted in this opinion, a claim to receive
payment for “items or services resulting from a violation of” the AKS is, by statute, a false or
fraudulent claim under the FCA. 42 U.S.C. § 1320a-7b(g)). That statutory rule, however, was

enacted fairly recently and, on its face, applies only to the FCA, not FCA-modeled state statutes
like the TMFCA or the relevant provisions of MAPIL. Accordingly, while the TMFCA and the
MAPIL false claims provisions may resemble the FCA in most ways, they do not share its explicit
approach to AKS violations. The court concluded that a Medicaid claim tainted by an AKS
violation could still theoretically support a claim under those statutes, but only if the relevant state
established the necessary elements of falsity and materiality under a “false certification of
compliance with a material condition” theory, as set out by the Supreme Court in in Universal
Health Servs., Inc. v. U.S. ex rel. Escobar, 579 U.S. 176, 183 (2016). Because Folse and the states
had sufficiently pleaded falsity and materiality, they were entitled to proceed under such a theory.
See Napper, 2021 WL 4992651, at *12–15.

Having concluded that an AKS violation could support a claim under the TMFCA and
MAPIL, as well as under the FCA, the court turned next to whether the arrangements described in
the complaints represented plausible AKS violations. The court relied on the following list of
elements required for finding such a violation:
(1) the defendant solicited or received [or offered or paid] any remuneration,
including any kickback or bribe, directly or indirectly, overtly or covertly, in cash
or in kind, to any person; (2) that the remuneration was solicited or received to
induce such person to refer an individual to a person for furnishing or arranging of
an item or service; (3) that the item or service was one for which payment may be
made in whole or in part under a federal healthcare program; and (4) that the
defendant acted knowingly and willfully.
Napper, 2021 WL 4992651, at *15 (quoting United States v. St. Junius, 739 F.3d 193, 210 n.18
(5th Cir. 2013)).
The defendants had argued that, at least for most of the transactions at issue in this case,
the plaintiffs could not satisfy the third element, because the services involved were not covered

by Medicaid, which, the defendants argued, meant that there was no payment for an item or service
“under a federal healthcare program.” The court explained the situation as follows:
The plaintiffs allege that each service at issue was paid for under the Medicaid
program in one of two ways. For a few of those services—the ones compensable
through the ordinary claims process, such as certain podiatry services—there is no
reasonable basis for disputing that such claims were paid under Medicaid. Those
were simply ordinary Medicaid claims; if any Medicaid claims qualify for AKS
protection—which they do—then those claims did as well. The second category of
alleged Medicaid payment, however, is both more complicated and more central to
the plaintiffs’ case. Although compensable specialty services accounted for a
portion of the defendants’ business, the historical core of the business was dentistry,
and all parties agree that neither Tennessee nor Louisiana Medicaid pays for most
non-emergency adult dental services. The plaintiffs argue that such services
nevertheless were paid for “under” those programs because they were subsidized
through IME deductions.

Id. at *16. The court ultimately agreed with the plaintiffs’ argument in that regard based on a close
reading of the language of the AKS, holding that the AKS’s prohibition applies, at least, to “all
services for which Medicaid pays a discrete sum as a means to compensate for a specific service
that was actually provided, whether or not such a payment occurred directly, through the ordinary
claims process alone, or indirectly, through the application of an IME deduction.” Id.
The court turned next to the defendants’ argument regarding the first two elements of an
AKS violation, regarding remuneration. The court concluded that the plaintiffs had adequately
alleged remuneration related to both Scheme One and Scheme Two. Regarding Scheme One,
involving kickbacks to LTC facilities, the court wrote:
The defendants provided free services to [some of the] facilities’ . . . residents, and
those services were undoubtedly valuable. Although the defendants protest that the
services were provided to [residents] and not to the LTC facilities themselves, the
plaintiffs have plausibly alleged that those services were valuable to the facilities
because they (1) were a valuable amenity that was attractive to residents and (2)
reduced the costs associated with assisting residents with transportation. Just how
valuable the free services provided to . . . patients were to LTC facilities themselves
is a question of fact dependent on a number of contextual factors, and the plaintiffs
will ultimately bear the burden of establishing that those services were, in fact,
being knowingly provided in exchange for referrals from the LTC facility. At this
stage, however, the plaintiffs were only required to plead the elements of their claim
plausibly and with particularity, which they have done.

Id. at *17. Regarding Scheme Two, involving kickbacks from provider affiliates, the court wrote:
The defendants argue that the relationship between CSM and its provider affiliates
was simply an ordinary business arrangement between a regional company with a
sound business model and local contractors who performed necessary services in
conjunction with that business model. But the presence of some legitimate business
motivations is not necessarily fatal to an alleged AKS violation. For example,
courts have held that a payment made for the purpose of inducing a referral can
violate the AKS, “even if the payments were also intended to compensate for
professional services.” United States v. Borrasi, 639 F.3d 774, 782 (7th Cir. 2011)
(quoting United States v. Greber, 760 F.2d 68, 72 (3d Cir. 1985)). Indeed, it is
common for AKS violations to occur alongside legitimate medical business
activities; kickback schemes are only successful insofar as they are able to embed
themselves within the vast, lucrative universe of ordinary healthcare services and
payments. The defendants will have the opportunity to set forth evidence regarding
the purposes of the payments they made to provider affiliates, as well as whether
they possessed knowledge of the supposed wrongfulness of such payments. At this
stage, however, the plaintiffs have adequately pleaded that the payments, whatever
else they were, were also kickbacks.

Id. The court considered and rejected a handful of additional AKS-based arguments, including
whether the plaintiffs adequately pleaded knowledge and willfulness (they had) and whether the
plaintiffs were required to plead or show any of the services involved were unnecessary or
inadequate (they were not). Id. at *17–18. The court also concluded that the plaintiffs had
adequately pleaded conspiracy. Id. at *18–19.
Finally, the court considered Tennessee’s common law claims. The court noted that the
structure of the TennCare system, which relies on managed care intermediaries rather than direct
payments to providers, complicated matters somewhat, but the court ultimately concluded that
established Tennessee caselaw recognizing the potential viability of claims for indirect unjust
enrichment meant that dismissing the claims was not supported. The court addressed a few more
arguments that are of limited importance at this juncture and denied the motions to dismiss, with
the qualification that Louisiana and Folse would need to amend their complaints to resolve certain

drafting deficiencies. Id. at *24. Shortly thereafter, the states filed an Amended Complaint in
Intervention and Folse filed a Second Amended Complaint. Those Amended Complaints rectified
the flaws that the court had identified but otherwise retained the basic structure and allegations
that had previously been pleaded. (Doc. Nos. 143–44.)
C. The Defendants’ Answers and the Pending Motion
On February 1, 2022, CSM and its related defendants filed an Answer to each Amended
Complaint. (Doc. Nos. 161–62.) Each Answer included a list of forty “AFFIRMATIVE AND
ADDITIONAL DEFENSES.” (Doc. No. 162 at 5–14.; Doc. No. 163 at 12–20.) On February 22,
2022, Folse and the governments filed separate, but largely overlapping, Motions to Strike directed
at the defenses. (Doc. No. 165, 167.) Broadly speaking, the challenges to the defenses can be

grouped into five arguments: (1) the Answers were untimely and therefore all defenses should be
barred; (2) some defenses are inconsistent with the court’s earlier opinion; (3) some defenses are
common law in nature and cannot be applied to statutory claims, particularly those based on
congressionally authorized appropriations; (4) some defenses do not actually represent defenses to
liability under the relevant causes of action; and (5) some defenses are duplicative of each other.
The first of those arguments applies to each defense pleaded. The remaining four are, cumulatively,
directed at a bit over half of the forty defenses.
II. LEGAL STANDARD
Under Rule 12(f) of the Federal Rules of Civil Procedure, a court may, on its own or upon
a timely motion, “order any redundant, immaterial, impertinent, or scandalous matter stricken from
any pleading, motion, or other paper.” Fed R. Civ. P. 12(f). Rule 12(f) expressly acknowledges

that “[t]he objection that a responsive pleading or separate defense therein fails to state a legal
defense may be raised by motion filed under this section.” Id. However, courts construing and
applying Rule 12(f) have followed the rule that “[a] motion to strike is a drastic remedy that should
be used sparingly and only when the purposes of justice require.” Driving Sch. Assoc. of Ohio v.
Shipley, No. 1:92-CV-00083, 2006 WL 2667017, at *1 (N.D. Ohio 2006) (citing Brown &
Williamson Tobacco Corp. v. United States, 201 F.2d 819, 822 (6th Cir. 1953)).
A motion to strike an affirmative defense under Rule 12(f) “is proper if the defense is
insufficient; that is, if ‘as a matter of law, the defense cannot succeed under any circumstances.’”
S.E.C. v. Thorn, No. 2:01-CV-290, 2002 WL 31412440, *2 (S.D. Ohio 2002) (quoting Ameriwood
Indus. Int’l Corp. v. Arthur Andersen & Co., 961 F. Supp. 1078, 1083 (W.D. Mich. 1997)). A

motion to strike should not be granted “if the insufficiency of the defense is not clearly apparent,
or if it raises factual issues that should be determined on a hearing on the merits.” United States v.
Pretty Prods. Inc., 780 F. Supp. 1488, 1498 (S.D. Ohio 1991) (quoting 5A Wright & Miller, Fed.
Prac. & Proc. § 1380 (1990)). The court “may only strike those defenses ‘so legally insufficient
that it is beyond cavil that defendants could not prevail on them.’” Id. (citation omitted). The
decision whether to strike an affirmative defense is within the discretion of the district court. See
Conocophillips Co. v. Shaffer, No. 3:05 CV 7131, 2005 WL 2280393, at *2 (N.D. Ohio 2005)
(“Rule 12(f) permits the Court to act with discretion in that it may strike irrelevant and superfluous
defenses or let them stand. There is absolutely no harm in letting them remain in the pleadings if,
as the Plaintiff contends, they are inapplicable.”)
III. ANALYSIS
A. Nature of the Pending Requests

Before the court addresses the substance of the pending motions, it may be helpful to
highlight specifically what is—and what is not—at stake. Federal Rule of Civil Procedure 8(c)
generally requires defendants to “affirmatively state any avoidance or affirmative defense” in their
first response to a pleading, and the failure to do so may (but does not necessarily) result in waiver
of the defense. See Brent v. Wayne Cnty. Dep’t of Hum. Servs., 901 F.3d 656, 680 (6th Cir. 2018)
(citing Horton v. Potter, 369 F.3d 906, 911 (6th Cir. 2004); Kennedy v. City of Cleveland, 797
F.2d 297, 300 (6th Cir. 1986)); but see Shelbyville Hosp. Corp. v. Mosley, No. 4:13-CV-88, 2017
WL 5586729, at *14 (E.D. Tenn. Nov. 20, 2017) (“[F]ailure to raise an affirmative defense by
responsive pleading does not always result in waiver.”) (quoting Smith v. Sushka, 117 F.3d 965,
969 (6th Cir. 1997)). As a practical matter, then, the inclusion of an affirmative defense in an

answer often functions a great deal like the inclusion of a claim in a complaint; it establishes that
the particular defense is actually part of the case before the court.
Not every way that a defendant might defeat a claim, however, is an affirmative defense.
“An affirmative defense, under the meaning of Fed. R. Civ. P. 8(c), is a defense that does not
negate the elements of the plaintiff’s claim, but instead precludes liability even if all of the
elements of the plaintiff’s claim are proven.” Roberge v. Hannah Marine Corp., 124 F.3d 199
(Table), 1997 WL 468330, at *3 (6th Cir. Aug. 13, 1997). Aside from admitting or denying the
specific allegations in the complaint, an answer is not required to do anything or plead anything to
preserve the defendant’s right to pursue a defense based on negating elements of the plaintiff’s
claims.
Many of the defenses included by these defendants in their Answers plainly fall in this
latter category of those for which special pleading is not required. For example, the Twenty-Eighth

Defense is that each relevant Amended Complaint “fails to establish the elements necessary for
recovery under any state or federal False Claims Act, the Federal Priority Statute and doctrines of
unjust enrichment, payment by mistake or any other common law claim.” (Doc. No. 162 at 10;
Doc. No. 163 at 17.) That defense involves nothing but the negation of the stated claims and
therefore is not an affirmative defense that required special pleading. Other pleaded defenses are
similarly focused on the elements of the claims at issue. Such unnecessarily pleaded defenses do
not preserve any argument or issue, and, just as they add nothing to the case, striking them would
remove nothing. Substantial portions of the plaintiffs’ motions are, in essence, inconsequential
requests to remove just-as-inconsequential language—classic “time wasters” focused on “purely
cosmetic” matters, as motions to strike are often criticized for being. Neal v. City of Detroit, No.

17-13170, 2018 WL 1399252, at *1 (E.D. Mich. Mar. 19, 2018) (quoting Wright & Miller, 5C
Fed. Prac. & Proc. § 1382 (3d ed. 2004)).
That said, there are sometimes good reasons to move to strike a defense—particularly a
meritless affirmative defense that, unless stricken, would expand the scope of issues under
consideration in a case. It may, moreover, be helpful to obtain rulings from the court, at an early
stage, on core legal issues that will determine the direction of litigation, and a motion to strike a
defense is one legitimate way to obtain such an early ruling. In this case, however, the court has
already issued a lengthy opinion in which it resolved five separate motions to dismiss, and the
court hopes that its reasoning in that opinion provided the parties with sufficient notice of the
framework on which the court expects to rely in this case.
The court will therefore exercise its discretion to focus on the aspects of the plaintiffs’ and
the relator’s requests, if any, that either present actual opportunities to move the case forward or

that identify defenses that are so truly extraneous to the case as to warrant being stricken, rather
than just ignored. Such an approach is not merely a good use of the court’s time and resources, but
also consistent with the high standard governing motions to strike. While a motion to strike a
defense may superficially resemble a 12(b)(6) motion to dismiss a claim—just with the shoe on
the other foot—Rule 12(f)’s “cannot succeed under any circumstances” standard is significantly
more demanding of the movant than Rule 12(b)(6). See Hutchings v. Fed. Ins. Co., No. 6:08-CV-
305-ORL-19KR, 2008 WL 4186994, at *2 (M.D. Fla. Sept. 8, 2008) (noting differences between
standards under Rule 12(b)(6) and Rule 12(f)). Many of the defendants’ claimed defenses may be
unlikely to pan out, but there is no basis, under the Rules of Civil Procedure, for rushing ahead to
evaluate them now by the same standard that the court applies to claims in a complaint.

B. Timeliness of Answer
Pursuant to Rule 15(a)(3) of the Federal Rules of Civil Procedure, “[u]nless the court orders
otherwise, any required response to an amended pleading must be made within the time remaining
to respond to the original pleading or within 14 days after service of the amended pleading,
whichever is later.” By that rule, the CSM defendants should have filed their Answers by
November 23, 2021. They did not file the Answers, however, until February 1, 2022. (Doc. Nos.
162–63.) The CSM defendants concede that their Answers were untimely, which they say was the
result of “a series of unforeseeable circumstances,” including a “computer crash that resulted in
data loss and required several weeks to rectify” and two separate family funerals. (Doc. No. 169
at 5 n.2.) The defendants argue, however, that the states and Folse have not been prejudiced by the
delay and that the court should therefore permit the defendants to proceed without any sanction
for their untimeliness.
Most litigation deadlines at the district court level are subject to the qualification, set out

in Rule 6(b)(1), that, “[w]hen an act may or must be done within a specified time, the court may,
for good cause, extend the time: (A) with or without motion or notice if the court acts, or if a
request is made, before the original time or its extension expires; or (B) on motion made after the
time has expired if the party failed to act because of excusable neglect.” Fed. R. Civ. P. 6(b); see
MRP Props., LLC v. United States, No. 17-CV-11174, 2017 WL 11518355, at *1 (E.D. Mich. Oct.
5, 2017). The court therefore construes the defendants’ Answers and/or their Response to the
pending motions as including a request for an extension pursuant to Fed. R. Civ. P. 6(b)(1)(B),
which the court will grant.
“Excusable neglect is a ‘somewhat elastic concept’ that is ‘at bottom an equitable one,
taking account of all relevant circumstances.’” Century Indem. Co. v. Begley Co., 323 F.R.D. 237,

241 (E.D. Ky. 2018) (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S.
380, 395 (1993)). Each of the “principal factors” typically considered by courts—“(1) the danger
of prejudice to the nonmoving party, (2) the length of the delay and its potential impact on judicial
proceedings, (3) the reason for the delay, (4) whether the delay was within the reasonable control
of the moving party, and (5) whether the late-filing party acted in good faith,” Nafziger v.
McDermott Int’l, Inc., 467 F.3d 514, 522 (6th Cir. 2006)—supports granting an extension here.
The court therefore does so and will not impose any sanctions for untimeliness. In the future,
however, if any party needs an extension, it should request that extension in a timely manner—
ideally, before the relevant deadline.
C. Consistency with the Court’s Earlier Opinion
The court’s prior opinion addressed a number of foundational issues, including some raised
by the relatively novel features of this case. Some of the defendants’ stated defenses directly
contradict aspects of that analysis. For example—and most egregiously—Defense 31 is not really

a substantive defense at all, but rather a bare claim that the claims at issue were not pleaded “with
the degree of specificity and particularity required.” (Doc. No. 163 at 17.) The sufficiency of the
underlying pleading, however, was already addressed by the court at length in response to multiple
motions. Although the defendants take issue with the details of some of the arguments that Folse
and the governments make regarding the earlier opinion, they do not ultimately dispute that they
have pleaded some defenses that are difficult to square with the court’s already-issued reasoning.
Rather, the defendants simply argue that they should be permitted to plead any colorable defenses
that they wish to state and preserve, even if the court’s holdings suggest that a particular defense
is unlikely to succeed at the district court level.
The defendants are correct that there is a difference between merely preserving a colorable,

but rejected, defense, as the defendants have done, and improperly trying to resurrect such a
rejected argument in connection with a substantive motion. If the defendants raise any already-
decided issue in connection with any future motion, the court expects to adhere to the ordinary rule
that, in most such instances,
[t]he law-of-the-case doctrine precludes reconsideration of a previously-decided
issue at a subsequent stage in the litigation “unless one of three exceptional
circumstances exists: [1] the evidence in a subsequent trial was substantially
different; [2] controlling authority has since made a contrary decision of law
applicable to such issues; or [3] the decision was clearly erroneous, and would work
a substantial injustice.”

J.L. Spoons, Inc. v. Ohio Dep’t of Pub. Safety, 509 F. App’x 464, 469 (6th Cir. 2012) (quoting
Poundstone v. Patriot Coal Co., 485 F.3d 891, 895 (6th Cir. 2007)). Re-raising arguments that the
court has already rejected, in the absence of such circumstances, would indeed be unwelcome.
That does not mean, however, that there is no basis for keeping the rejected defenses on the books.
For example, it is within the realm of reasonable possibility that the Sixth Circuit or Supreme Court
could issue intervening caselaw drawing this court’s conclusions into question, particularly in light

of the novel nature of some of the questions involved. And, of course, depending on how this case
is resolved, the issues may be raised directly on appeal in this case itself. There is, in short, nothing
wrong with the defendants’ having taken care to preserve these arguments and issues, despite the
fact that the court has rejected some of their positions under current law.
The court is unpersuaded by the argument that it should revisit and reiterate its earlier
holdings on these issues in order to avoid hypothetical discovery abuses based on the rejected
defenses. The court’s prior legal holdings stand, regardless of what the Answers say. Nothing about
the Answers prevents the court from keeping those holdings in mind when making decisions about
the scope of discovery. Indeed, the fact that these issues might come up again in discovery is just
more proof that it is unnecessary to go further into them now.

Going through each stated defense in order to parse the precise degree to which it is or is
not consistent with the court’s prior opinion would be both a poor use of the court’s time and a
departure from the court’s ordinary role of answering only those legal questions actually presented
as part of the necessary process of resolving a case or controversy. The court’s opinion resolving
the motions to dismiss speaks for itself. If the developed facts of this case ultimately call on the
court to consider the scope of its earlier holdings—whether during discovery, in connection with
a motion for summary judgment, or in some other way—the court will do so. Diving into those
details now, however, based solely on the defendants’ broad phrasing of potential defenses, would
necessitate a lengthy interpretation of the court’s prior holdings that is not contemplated by the
Federal Rules as part of the ordinary progress of a case.
D. Non-Statutory Defenses
The Answers include a number of defenses—such as those involving “unclean hands”—

that rely on common law and equitable principles rather than any citation to affirmative law
involving the FCA, the AKS, or the Medicaid program. Folse argues that applying such defenses
would be an impermissible intrusion on federal prerogatives, and the state governments, although
they do not pursue the most aggressive form of Folse’s constitutional argument, argue that those
defenses are inapplicable to the governments’ statutory claims.
In the CSM defendants’ Response, they do not go so far as to argue that the equitable
defenses that they have pleaded are sufficient to defeat recovery under the FCA, TMFCA, or
MAPIL. See, e.g., U.S. ex rel. Dye v. ATK Launch Sys., Inc., No. 1:06-CV-39 TS, 2008 WL
4642164, at *2 (D. Utah Oct. 16, 2008) (striking equitable defense as insufficient as a matter of
law to defeat FCA liability). Rather, the defendants argue that the states’ Amended Complaint

“opened the door to asserting these defenses” by including “claims of unjust enrichment and
quantum meruit” on behalf of “both Tennessee and Louisiana.” (Doc. No. 169 at 8.) This
characterization is not entirely accurate, as far as the court can tell. Tennessee pleads four counts,
the latter two of which are, in fact, common law claims relying on conventional equitable
principles—although neither one actually uses the term “quantum meruit.” (Doc. No. 144 ¶¶ 154–
60.) Louisiana, though, only pleads two counts, both of which are expressly statutory. (Id. ¶¶ 161–
67.) In any event, however, it is true that the states’ operative complaint includes some common
law claims, such that raising equitable defenses is supported. The court therefore will not strike
equitable defenses from that Answer.
Folse, however, has pleaded no such common law claims. His Second Amended
Complaint, rather, includes three expressly statutory causes of action. (Doc. No. 143 ¶¶ 85–109.)
The defendants’ only response to that fact is that, “[t]echnically, Folse could move to amend his
complaint to assert similar claims.” (Doc. No. 169 at 8.) The court is not inclined to assume that

such an amendment would be supported, given that Folse’s only role in this case is pursuant to his
statutorily-granted authority to initiate—and, in the absence of intervention, pursue—statutory
claims on behalf of the relevant governments as a relator. Regardless, the purpose of an answer is
to respond to the complaint that was filed, not a hypothetical complaint that a plaintiff
“technically . . . could” file. The inclusion of equitable defenses in the Answer to Folse’s Second
Amended Complaint therefore does appear to be the kind of wholly unsupported pleading that
would warrant being stricken.
That argument, though, only extends insofar as the cited defenses are, in fact, non-statutory
in nature. Folse suggests that this argument supports striking Defenses 1, 11, 28, 29, and 40.
Defenses 1, 11, and 29 involve issues of unclean hands and estoppel that are genuinely equitable

in nature, and the court will order those defenses stricken. Defenses 28 and 40, however, are not
so plainly confined to the common law. Defense 28 reads, in its entirety, as follows: “The
Complaint fails to establish the elements necessary for recovery under any state or federal False
Claims Act, the Federal Priority Statute and doctrines of unjust enrichment, payment by mistake
or any other common law claim.” (Doc. No. 162 at 10.) The references, in the latter part of the
defense, to equitable grounds for recovery that Folse has not pleaded, are misplaced, but the rest
of the defense is focused on federal statutes and is not implicated by Folse’s argument in this
regard. The court, accordingly, will strike this defense only in part.
Defense 40 asserts that the claims being prosecuted by Folse as the relator “fail because
they are barred by reason of public disclosure and/or because [Folse] engages in substantially the
same practice and has encouraged the practices he claims are unlawful to dentists in the form of
continued education and seminars.” (Id. at 12.) Aspects of that defense could be read as reiterating

the unclean hands defense that the court has rejected as inapplicable to the FCA. The defense also,
however, appears to reference the so-called “public-disclosure bar,” a statutory provision that “bars
qui tam actions that merely feed off prior public disclosures of fraud.” See United States ex rel.
Holloway v. Heartland Hospice, Inc., 960 F.3d 836, 843 (6th Cir. 2020) (citing 31 U.S.C. §
3730(e)(4)(A)). While the public-disclosure bar is not a defense to FCA liability, it may have
bearing on Folse’s own authority to pursue that liability in the wake of the government’s
declination to intervene. Citation to that provision as a defense would therefore make sense.
However, the CSM defendants already pleaded public disclosure separately, in Defense 30. (Doc.
No. 162 at 10.) While the court, as it will discuss later in this opinion, does not consider mere
redundancy, taken alone, to be a persuasive ground for striking a defense, the redundancy does

eliminate any harm that could come from striking the mention of public disclosure in Defense 40.
Other parts of Defense 40 may reflect an attempt to invoke the subsection of the FCA
stating that, “if the court finds that the action was brought by a person who planned and initiated
the violation of [the FCA] upon which the action was brought, then the court may, to the extent
the court considers appropriate, reduce the share of the proceeds of the action which the person
would otherwise receive.” 31 U.S.C. § 3730. That provision, though, is not a defense to liability
or even to the amount of damages; it bears only on how the damages are split between the relator
and the government. Moreover, it applies to relators who played a role in “the violation . . . upon
which the action was brought,” not relators who simply committed somewhat similar violations in
their own businesses. This reading of Defense 40 therefore similarly does not support retaining it.
The court will therefore grant Folse’s motion as to Defenses 1, 11, 29, and 40 and will
grant it partially as to Defense 28.2 The court will not, however, strike the defenses from the

defendants’ Answer to the governments’ claims. The State of Tennessee chose to include common
law claims in its Complaint, and it must therefore contend with common law defenses—at least as
long as those common law defenses are, as the court will discuss later in this opinion, actually
directed at the governments’ claims.
E. Defenses Alleged to be Insufficient
1. Defenses Related to Acquiescence by TennCare
Defenses 20, 23, and 24 address issues related to the Medicaid program’s handling of the
underlying claims and deductions. Defense 20 is that “[t]he claims fail, in whole or in part, because
the Defendants have received approval to provide their services and support for their business
practice from individuals at TennCare, including the former Director of TennCare.” (Doc. No. 163

at 16.) Defense 23 adds the contention that “the government’s knowledge of the facts underlying
the allegedly false claims negates the scienter, falsity, and materiality requirements of the False
Claims Act,” and Defense 24 extends the argument a step further to suggest that the defendants’
“actions were taken in good faith and in reasonable reliance upon regulatory interpretations and
judgments by the Government and its agents and contractors upon whom the Defendants were
entitled to rely.” (Id.) The governments and Folse point out, correctly, that acquiescence by specific
government actors is not, in and of itself, a recognized defense to liability under the FCA or,

2 Because these defenses will be stricken as not directed at any claim pleaded by Folse, the court will not
address Folse’s argument that applying those defenses to claims related to Medicaid would violate OPM v.
Richmond, 496 U.S. 414 (1990).
presumably, state statutes modeled on the FCA. The injured party in an FCA case is the
government, not individual government administrators, and “[i]t is well established that estoppel
cannot be used against the government on the same terms as against private parties.” Fuller v.
United States, 475 F. Supp. 3d 762, 767 (S.D. Ohio 2020) (quoting United States v. Guy, 978 F.2d

934, 937 (6th Cir. 1992)).
The defendants respond by arguing that information about what the governments knew and
what they communicated to the defendants is potentially relevant to (1) whether the defendants
possessed the requisite culpable mental state, (2) whether the governments considered the
conditions with which the defendants failed to comply to be material to payment, and (3) whether
the governments “considered the [d]efendants’ conduct to amount to fraud.” (Doc. No. 169 at 4–
5.) The court is aware of no viable, separate defense to FCA, TMFCA, or MAPIL liability that
would fit the description of the third item on that list; false clams liability does not hinge on
whether government actors thought that the false claims at issue met a particular legal definition
of “fraud.” With regard to the first two potential defenses, however, the defendants are correct. A

violation of the FCA must be knowing, reckless, or made in deliberate ignorance of the truth, 31
U.S.C. § 3729(a)(1), (b)(1)(A), and the government’s acquiescence to an alleged behavior may be
relevant to that inquiry, particularly when liability is premised on the question of whether the
defendant impliedly certified compliance with a particular requirement. See U.S. ex rel. Burlbaw
v. Orenduff, 548 F.3d 931, 951–57 (10th Cir. 2008) (discussing rationales for considering
government knowledge as part of scienter inquiry under the FCA). It is fair to wonder how one
could impliedly certify a proposition to a listener, if both you and the listener openly know that the
proposition is false.
As for materiality, the Supreme Court has clearly held that, “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.” Escobar, 579 U.S. at 195. And, as
the court has already held, the TMFCA and the false claims provisions of MAPIL—unlike the

FCA—require the governments to establish materiality of an AKS violation as a factual matter.
See Napper, 2021 WL 4992651, at *12–15. At most, then, Defenses 20, 23, and 24, arguably
overstate the breadth and certainty of the defenses asserted. That, though, is no basis for striking
them.
2. Defenses Pleaded Against the Governments that Apply Only to the Relator
As the governments point out, two of the defenses pleaded in the CSM defendants’ Answer
to the Amended Complaint in Intervention—specifically, Defense 9 and Defense 11—are plainly
inapplicable to the governments’ claims. Defense 9 involves Folse’s lack of “firsthand, personal
knowledge of the Defendants’ business practices.” (Doc. No. 163 at 14.) Defense 11 involves
Folse’s having allegedly “engage[d] in substantially the same business practices.” (Id.) Neither

defense has anything to do with the governments’ own claims. The court will accordingly strike
the defenses as wholly inapplicable to the claims at issue, just as it will strike the defendants’
equitable defenses to claims that Folse has not actually pleaded.
F. Duplicative Defenses
Finally, the court turns to the argument that many of the defenses are duplicative. It is hard
to deny that many of the defenses are redundant, but it is also hard to see why that matters or even
why there is necessarily anything wrong with that redundancy. Nearly every well-drafted
affirmative pleading includes some extraneous material. Indeed, as the court observed in its prior
opinion, the plaintiffs themselves have pleaded information that is not strictly necessary for the
statement or preservation of their claims, for no apparent purpose other than telling the story of
the case and explaining the importance of the legal principles at issue. See Folse, 2021 WL
4992651, at *18.
Moreover, while redundancy may not always be good writing, it is frequently good
lawyering. There is no penalty for preserving a key claim or defense twice or three times, but if a
lawyer fails to preserve a key claim or defense altogether, it can be disastrous for the client’s case.
As aresult, pleadings often take great, repetitive pains to make sure that every argument that needs
to be preserved has been preserved, even if that preservation probably could have been done in
many fewer words. That is an unfortunate fact of litigation. A pleading’s inefficiency, however, is
not ameliorated by responding to it with a functionally meaningless motion to strike. The court
accordingly sees no basis for exercising its discretion to strike redundant material from the Answer
under Rule 12(f).
IV. CONCLUSION
For the foregoing reasons, Folse’s Motion to Strike Certain Affirmative Defenses from the
CSM Defendants’ Answer to Relator’s Second Amended Complaint (Doc. No. 165) and the state
plaintiffs’ Motion to Strike Certain Affirmative Defenses from the CSM Defendants’ Answer to
Amended Complaint in Intervention (Doc. No. 167) will each be granted in part and denied in part.
The court will strike Defenses 1, 11, 29, and 40 from the CSM Defendants’ Answer to Folse’s
Second Amended Complaint, as well as part of Defense 28, and will strike Defenses 9 and 11 from
the CSM Defendants’ Answer to the Amended Complaint in Intervention.
An appropriate order will enter. i Ly Uy
ALETA A. TRAUGER
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10438147. Public record. Not legal advice.