United States v. Integracare Home Health Services, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

TYLER DIVISION

§

UNITED STATES OF AMERICA, ex §

rel. SIMONE SPARKS, §

§

Plaintiff, §

§ Case No. 6:14-cv-480-JDK-KNM

v. §

§

INTEGRACARE HOME HEALTH §

SERVICES, INC. and KINDRED §

HEALTHCARE, INC., §

§

Defendants. §

§

ORDER ADOPTING REPORT AND RECOMMENDATION

OF THE UNITED STATES MAGISTRATE JUDGE

Relator Simone Sparks brought this action pursuant to the qui tam provisions

of the False Claims Act (“FCA”), as amended, 31 U.S.C. §§ 3729–3733, and the

Federal Anti-Kickback Statute, 42 U.S.C. §§ 1320a-7b. The case was referred to

United States Magistrate Judge K. Nicole Mitchell pursuant to 28 U.S.C. § 636.

Before the Court is Defendants’ motion to dismiss Relator’s Third Amended

Complaint. Docket No. 93. The Magistrate Judge issued a Report and

Recommendation recommending that the Court grant the motion. Docket No. 112.

Relator filed written objections, and Defendants responded to those objections.

Docket Nos. 115 and 118.

Where a party timely objects to the Report and Recommendation, the Court

reviews the objected-to findings and conclusions of the Magistrate Judge de novo. 28

U.S.C. § 636(b)(1). In conducting a de novo review, the Court examines the entire

record and makes an independent assessment under the law. Douglass v. United

Servs. Auto. Ass’n, 79 F.3d 1415, 1430 (5th Cir. 1996) (en banc), superseded on other

grounds by statute, 28 U.S.C. § 636(b)(1) (extending the time to file objections from

ten to fourteen days).

Relator alleges that Defendants engaged in an “overarching scheme to ‘grow’

Defendants’ business by increasing patient enrollments by any means necessary and

maximizing revenues through fraudulent billing.” Docket No. 91 ¶ 3. The Third

Amended Complaint is Relator’s fourth attempt to meet the applicable pleading

standard. The Court previously dismissed Relator’s First Amended Complaint and

Second Amended Complaint as deficient and provided Relator the opportunity to

amend based on the identified deficiencies. Docket Nos. 58 and 89.

Despite the Court’s guidance, Relator made few substantive changes in the

Second Amended Complaint and Third Amended Complaint. Accordingly, Judge

Mitchell’s Report concludes that the Third Amended Complaint still does not meet

the requisite pleading standard. The Report also suggests that Relator should not be

afforded an additional, fourth opportunity to amend the pleadings as a result of the

prior, repeated opportunities.

Properly pleading an FCA violation requires a relator to plead that “(1) there

was a false statement or fraudulent course of conduct; (2) made or carried out with

the requisite scienter; (3) that was material; and (4) that caused the government to

pay out money or to forfeit moneys due (i.e., that involved a claim).” United States ex

rel. Longhi v. Lithium Power Tech. Inc., 575 F.3d 458, 467 (5th Cir. 2009) (adopting

the requirements of United States ex rel. Wilson v. Kellogg Brown & Root, Inc., 525

F.3d 370, 376 (4th Cir.2008)). To be material, the alleged fraud must have “a natural

tendency to influence, or be capable of influencing, the payment or receipt of money

or property.” 31 U.S.C. § 3729(b)(4); Universal Health Servs. Inc. v. United States ex

rel. Escobar, 579 U.S. 176, 192–93 (2016).

Relator’s objections re-assert the same facts and arguments that Relator has

previously raised, and which the Court previously rejected. But Relator has not

pleaded specific factual details of a fraudulent scheme to submit false claims to the

government. The Court has also already considered and distinguished the case

Relator relies on—United States ex rel. Prather v. Brookdale Senior Living

Communities, Inc., 838 F.3d 750 (6th Cir. 2016). See Docket Nos. 89 at 3, 112

at 15–16. The Third Amended Complaint also relies on the same documents

submitted with earlier pleadings and the same general allegations of an overarching

scheme. And it repeats the same conclusory allegations—previously rejected by the

Court—that final bills were submitted to Medicare with incomplete or missing

documentation. These allegations are still insufficient to plead a certification claim.

See Docket No. 89 at 3. Relator’s objections do not dispute the Report’s finding that

she has abandoned any claim for a violation of the Anti-Kickback Statute and any

claims against Defendant Kindred Healthcare, Inc. or Girling.

The Court notes that Relator has two pending motions for leave to file a Fourth

Amended Complaint. Docket Nos. 109, 113. As stated in the Report, the Court may

dismiss a claim without granting leave to amend if a party “has failed to plead with

particularity after being afforded repeated opportunities to do so.” Docket No. 112

at 18 (citing Hart v. Bayer Corp., 199 F.3d 248 n.6 (5th Cir. 2000)). Here, Relator has

amended her claims multiple times after the Court dismissed for failure to meet the

requisite pleading standard. Relator has exhausted her opportunities to amend the

pleadings.

Having conducted a de novo review of the record in this case and the

Magistrate Judge’s Report, the Court has determined that the Report of the

Magistrate Judge is correct, and Relator’s objections are without merit. Accordingly,

the Court OVERRULES Relator’s objections (Docket No. 115) and ADOPTS the

Report of the Magistrate Judge (Docket No. 112) as the opinion of the District Court.

The Court GRANTS Defendants’ motion to dismiss (Docket No. 93) and DISMISSES

Relator’s claims with prejudice, but without prejudice to the United States to bring

these claims. Relator’s motions for leave to file an amended complaint (Docket

Nos. 109, 113) are DENIED.

So ORDERED and SIGNED this 21st day of October, 2024.

fen J Korb

JHREMYD. KERN DLE

UNITED STATES DISTRICT JUDGE