Pilat v. Amedisys, Inc.

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UNITED STATES DISTRICT COURT FEB 07 2025

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UNITED STATES OF AMERICA ex rel.

MICHAEL PILAT and

PHILIP MANISCALCO,

Plaintiffs, 17-CV-136 (JLS) (LGF)

v.

AMEDISYS, INC. and DOES 1-100,

Defendants.

DECISION

Relators Michael Pilat and Philip Maniscalco filed this False Claims Act

(“FCA”) suit against Amedisys, Inc. and Does 1-100. Dkt. 82.1 Amedisys moved to

dismiss Relators’ fourth amended complaint. On November 4, 2024, this Court

issued an order denying the motion to dismiss in its entirety. Dkt. 88. This

decision sets forth the reasons for that order.

PROCEDURAL HISTORY

Relators Pilat and Maniscalco filed the original complaint under seal on

February 25, 2017, and a first amended complaint under seal on July 25, 2018.

Dkt. 1; Dkt. 18. In 2021, the United States, as well as the named states and the

District of Columbia, informed the Court that they declined to intervene. Dkt. 38.

1 Harlier versions of the complaint in this case varied slightly in parties and claims.

See Dkt. 1; Dkt. 18; Dkt. 40; Dkt. 58. The operative version of the complaint is the

fourth amended complaint. Dkt. 82.

The Court unsealed the case the same day. Dkt. 39. On August 9, 2021, Relators

filed a second amended complaint, which Amedisys moved to dismiss. Dkt. 40; Dkt.

51.

Rather than oppose that motion, Relators filed a third amended complaint

(Dkt. 58), which Amedisys moved to dismiss (Dkt. 61). On March 13, 2023, the

Court granted Amedisys’s motion to dismiss Relators’ third amended complaint and

denied leave to amend. Dkt. 72. Relators appealed. Dkt. 74. On January 17, 2024,

the Second Circuit affirmed in part, vacated in part, and, on March 11, 2024,

remanded the case to this Court. Dkt. 78.

After remand, the Court held a status conference, at which the parties

discussed next steps and set a schedule. Dkt. 80. On April 17, 2024, Relators filed

their fourth amended complaint. Dkt. 82. Amedisys moved to dismiss the fourth

amended complaint. Dkt. 83. Relators responded (Dkt. 84), and Amedisys replied

(Dkt. 85). The Court heard oral argument and reserved decision. Dkt. 86. On

November 4, 2024, the Court issued an order denying Amedisys’s motion—and did

so before a written decision could be completed—so that the parties could begin

discovery without further delay. Dkt. 88. Today’s decision sets forth the reasons for

denial of the motion.

THE SECOND CIRCUIT DECISION

The Second Circuit’s decision on Relators’ third amended complaint provides

the framework for analyzing the fourth amended complaint.

I, Retaliation

First, regarding Relators’ retaliation claims, the Second Circuit concluded

that Relators sufficiently alleged that both Pilat and Maniscalco engaged in

protected activity. See Dkt. 78, at 5—7.2 The Circuit stated that Maniscalco’s

“refus[al] [to follow] instructions by his supervisors to recertify [a patient for] a

third time, [by] insisting that she was completely independent and it would be

unethical to do so”—after his “supervisors had already overruled his

recommendations for [that] specific Medicare patient twice and recertified the

patient after two six-week programs’—was sufficient to allege that he acted to stop

one or more FCA violations. See id. at 6 (internal quotation marks omitted). The

Circuit further concluded that Pilat’s repeated emails to his supervisor “about the

inability of the nurses and therapists to keep up with Amedisys’s extensive volume

of patients,” including one specific instance in November 2016, where Pilat told his

supervisor that “he had to schedule visits for 3 times as many patients as was safe,”

were sufficient to allege that he acted to stop one or more FCA violations. Id. at 6—7

(internal quotation marks omitted).

2 Page references to docket entries in this case are to the numbering automatically

generated by CM/ECF, which appears in the header of each page.

These allegations—related to concerns about patient care—amounted to

fraud, the court continued, because Relators also alleged that “Amedisys still billed

for the services ... as if the clinician had actually fully performed them, ... even

though many patients were seen only for a few minutes rather than an amount of

time commensurate with the Government billing.” Jd. at 7 (internal quotation

marks omitted).

The Second Circuit “express[ed] no view” about whether Pilat and Maniscalco

sufficiently alleged the remaining prongs of their retaliation claims, and left it to

this Court “to address those questions in the first instance.” Id.

Il. FCA Violations

Next, the Second Circuit considered whether Relators satisfied the specificity

requirements of Federal Rule of Civil Procedure 9(b), guided by United States ex rel.

Chorches v. American Medical Response, Inc., 865 F.3d 71, 86 (2d Cir. 2017).

As to the first Chorches prong, the Second Circuit held that Relators did not

allege sufficient facts to demonstrate that billing information was peculiarly within

Amedisys’s knowledge. Dkt. 78, at 11-12. The Circuit recognized that tension

existed between Relators’ allegations that (1) “in some cases[,] [Maniscalco] was

able to later review the forms [submitted by therapists outlining services

performed] and noticed changes . . . made by the billing department that specifically

increased the revenue to Amedisys,” and that (2) Relators only had contact with the

billing department “when coding specialists initiated conversations by reaching out

over telephone,” and “neither Relator was privy to the submission of the bills or

invoices to Government Funded Healthcare Programs.” Id. (internal quotation

marks omitted).

The Second Circuit noted that Relators could fix this pleading defect by

explaining “any distinction between the treatment forms they had access to and the

actual bills that comprised the false claims.” Jd. at 15. Relators also could “attempt

to reconcile their access to some forms used by the billing department with their

allegations that the billing department operated out of their purview.” Jd. And

Relators could “describe their digital access to treatment and billing records at

Amedisys, and explain whether and how they could virtually access the billing

record at issue.” Jd. at 15-16 (emphasis in original).

Regarding the second Chorches prong, the Second Circuit concluded that

Relators sufficiently alleged a strong inference that Amedisys submitted false

claims to the government. See id. at 8-11. It cited examples alleged in the third

amended complaint, in which “a clinician was instructed either to document patient

information falsely to allow for treatments for which the patient did not qualify, or

to recommend an unnecessary course of treatment.” Id. at 9-10. Relators also

“identified multiple specific instances in which Amedisys falsified timesheets,”

including by assigning nurses a weekly caseload that “made it physically impossible

to spend adequate time with each patient and resulted in billing for work never

performed.” Id. at 10.

III. State FCA Claims and Leave to Amend

The Second Circuit affirmed this Court’s dismissal of Relators’ state FCA

claims. See id. at 16. It also concluded that Relators should have leave to amend

their federal FCA claims, but not their state FCA claims. Jd. at 16-17.

FOURTH AMENDED COMPLAINT?

Relators allege that Amedisys is a home health services company whose

revenues began to suffer after facing allegations of Medicare fraud and entering into

a 2014 settlement agreement with the Department of Health and Human Services.

Dkt. 82 Jf 1-7. In May 2015, Pilat began working at Amedisys’s Amherst, New

York home health center as a clinical manager assistant and, in June 2015,

Maniscalco began working there as a physical therapist. Id. {4 8-9.

During their employment, Relators observed, and became personally aware

of, numerous allegedly fraudulent practices by Amedisys designed to generate or

inflate revenues through Medicare, Medicaid, TRICARE, and other government-

funded healthcare programs. Id. J 12; see also id. § 1. Amedisys allegedly sought

government payment for home health services that were not eligible for

reimbursement because it: (1) improperly recruited patients for home health

services via relationships with hospitals and nursing homes, without evaluating

eligibility or need, and without receiving proper approval from the patients’

physicians; (2) fraudulently billed for improper and/or medically unnecessary

3 This section contains a brief summary of the fourth amended complaint. For a full

recitation of the facts alleged in the fourth amended complaint, see Dkt. 82.

treatment, including patients who were not homebound or who no longer required

treatment; (3) falsified time records to bill for services not provided or improperly

rendered, as well as unsafe overscheduling of clinicians, leading to inadequate

patient care; (4) inflated Medicare and Medicaid reimbursements by “upcoding”

patients for a more severe diagnosis and more intensive level of care than was

warranted; and (5) falsified time entries to report that clinicians spent more time

with a patient than they actually did. See id. { 66(a)—(e); id. J 67-156.

Amedisys primarily employed these strategies at the direction, and under the

guidance, of senior regional personnel and officers from its headquarters. Id. { 17.

From at least 2015 onward, these practices resulted in fraudulent billing practices

and thousands of violations of the FCA and of the state false claims acts. Id. { 23.4

The fourth amended complaint contains claims for: (1) presentation of false

claims, in violation of 31 U.S.C. § 3729(a)(1)(A), see Dkt. 82 § 183-85; (2) making

or using a false record or statement to cause a claim to be paid, in violation of 31

U.S.C. § 3729(a)(1)(B), see Dkt. 82 J] 186—88; and (8) retaliation as to each Relator,

in violation of 31 U.S.C. § 3730(h), see id. 94 189-91.

LEGAL STANDARDS

I. Motion to Dismiss

On a motion pursuant to Federal Rule of Civil Procedure 12(b)(6), a “court’s

task is to assess the legal feasibility of the complaint.” Lynch v. City of N.Y., 952

4 As discussed above, the Second Circuit affirmed this Court’s dismissal of Relators’

state FCA claims. See Dkt. 78, at 16-17.

F.3d 67, 75 (2d Cir. 2020). The court “must take the facts alleged in the complaint

as true, drawing all reasonable inferences in [the plaintiffs] favor.” In re NYSE

Specialists Sec. Litig., 503 F.3d 89, 91 (2d Cir. 2007). To survive a Rule 12(b)(6)

motion, 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) (internal quotation marks and citation omitted). Courts “are not bound

to accept as true a legal conclusion couched as a factual allegation,” and

“[t]hreadbare recitals of the elements of a cause of action, supported by mere

conclusory statements, do not suffice.” Jd. (internal quotation marks and citation

omitted).

This standard demands “more than a sheer possibility that a defendant has

acted unlawfully.” Jd. Plausibility depends on many considerations: “the full

factual picture presented by the complaint, the particular cause of action and its

elements, and the existence of alternative explanations so obvious that they render

[the] plaintiffs inferences unreasonable.” Fink v. Time Warner Cable, 714 F.3d 739,

741 (2d Cir. 2018) (internal quotation marks and citation omitted).

II. False Claims Act and Rule 9(b)

The False Claims Act is an anti-fraud statute “enforced not just through

litigation brought by the Government itself, but also through civil qui tam actions

that are filed by private parties, called relators, in the name of the Government.”

Chorches, 865 F.3d at 81 (quoting Kellogg Brown & Root Servs., Inc. v. U.S. ex rel.

Carter, 575 U.S. 650, 653 (2015)) (internal quotation marks omitted). In relevant

part, the FCA imposes liability on any person who “knowingly presents, or causes

to be presented, a false or fraudulent claim for payment or approval” by the United

States government, 31 U.S.C. § 3729(a)(1)(A), “knowingly makes, uses, or causes to

be made or used, a false record or statement material to [such] a false or

fraudulent claim,” id. § 3729(a)(1)(B), or “conspires to commit [either] violation,” id.

§ 3729(a)(1)(C). 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 (quoting 31 U.S.C. § 3729(b)(2)(A)).

Substantive FCA allegations are subject to the heightened pleading

requirements of Federal Rule of Civil Procedure 9(b). Id. (first citing U.S. ex rel.

Ladas v. Exelis, Inc., 824 F.3d 16, 26 (2d Cir. 2016), and then citing Gold v.

Morrison-Knudsen Co., 68 F.3d 1475, 1476-77 (2d Cir. 1995)). When allegations

involve fraud, Rule 9(b) requires that a party “state with particularity the

circumstances constituting fraud.” Fed. R. Civ. P. 9(b). An FCA complaint alleging

fraud} ordinarily must “(1) specify the statements that the plaintiff contends were

fraudulent, (2) identify the speaker, (8) state where and when the statements were

made, and (4) explain why the statements were fraudulent.” Chorches, 865 F.3d at

81 Gnternal quotation marks and citation omitted). Courts sometimes characterize

this pleading standard “as the ‘who, what, when, where, and how’ of the alleged

fraud.” United States ex rel. Monda v. Sikorsky Aircraft Corp., No. 3:99CV1026

5 The pleading requirements for retaliation claims are discussed infra.

(JBA), 2005 WL 1925908, at *2 (D. Conn. Aug. 11, 2005), aff'd, 207 F. App’x 28 (2d

Cir. 2006) (citations omitted).

The adequacy of particularized allegations under Rule 9(b) is “case-and

context-specific.” Chorches, 865, F.3d at 81 (internal quotation marks and citation

omitted). Courts have described the “threefold” purpose of Rule 9(b) as “designed to

provide a defendant with fair notice of a plaintiffs claim, to safeguard a defendant’s

reputation from improvident charges of wrongdoing, and to protect a defendant

against the institution of a strike suit.” Ladas, 824 F.3d at 25 (internal quotation

marks and citation omitted). A court must dismiss a complaint under Rule 9(b)

where FCA claims under Sections 3729(a)(1)(A) and (B) rest on “speculation and

conclusory allegations.” United States ex rel. Duhaine v. Apple Health Care Inc., No.

3:19-CV-00963 (KAD), 2022 WL 3226631, at *5 (D. Conn. Aug. 10, 2022) (quoting

United States ex rel. Gelbman v. City of N.Y., 790 F. App’x 244, 249 (2d Cir. 2019))

(internal quotation marks omitted).

Despite Rule 9(b)’s strict pleading requirements, allegations may be based

on “information and belief when facts are peculiarly within the opposing party’s

knowledge.” Chorches, 865 F.3d at 81-82 (internal quotation marks and citation

omitted). Where pleading is permitted on information and belief, the complaint

must “adduce specific facts supporting a strong inference of fraud.” Id. at 82

(internal quotation marks and citation omitted).

10

DISCUSSION

Amedisys argues that the Court should dismiss the fourth amended

complaint in its entirety. See Dkt. 83-1, at 6. In particular, Amedisys argues that

Relators did not allege that Amedisys was aware of either Pilat’s or Maniscalco’s

protected conduct, and did not allege that either Pilat or Maniscalco was terminated

in retaliation for that conduct. See id. at 22-26. Amedisys also argues that

Relators’ FCA claims do not satisfy Rule 9(b), under Chorches. See id. at 18-18.

Finally, Amedisys argues that Relators do not allege falsity because several of their

theories of falsity cannot support an FCA violation, do not allege a false certification

claim (express or implied), and do not allege a false-records claim. See id. at 18-22.

As reflected in the order denying the motion to dismiss, this Court disagrees.

I. The Fourth Amended Complaint Sufficiently Alleges Retaliation

Claims as to Pilat and Maniscalco

The FCA’s anti-retaliation provision states:

[aJny employee ... shall be entitled to all relief necessary to make that

employee ... whole, if that employee ... is discharged, demoted,

suspended, threatened, harassed, or in any other manner discriminated

against in the terms and conditions of employment because of lawful

acts done by the employee... in furtherance of an action under this

section or other efforts to stop 1 or more violations of [the FCA].

31 U.S.C. § 8730(h)(1).6

6 Before 2009, Section 3730(h) provided a non-exclusive list of specific “lawful acts”

done in furtherance of an FCA action that protected an employee—and did not

include the broader language of “other efforts to stop... violations” that is now

included in Section 3730(h). Chorches, 865 F.3d at 97 (quoting 31 U.S.C. § 3730(h)

(2006)) Gnternal quotation marks omitted).

11

To state a retaliation claim under the FCA, courts “generally require[] a

plaintiff to 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 v. Salix

Pharms., Ltd., 752 F. App’x 99, 100 (2d Cir. 2019) (quoting Chorches, 865 F.3d at

95) (internal quotation marks omitted). If an employee’s alleged actions “are

sufficient to support a reasonable conclusion that the employer could have feared

being reported to the government for fraud or sued in a qui tam action by the

employee,” then the employee has stated a retaliation claim under Section 3730(h).

U.S. ex rel. Sanchez v. Lymphatx, Inc., 596 F.3d 1300, 1804 (11th Cir. 2010).

FCA-based retaliation claims are not subject to the more stringent pleading

requirements of Rule 9(b). See Chorches, 865 F.3d at 95 (“The particularity

requirement of Rule 9(b) does not apply to retaliation claims under the FCA.”).

Rather, a plaintiff must “show a good faith basis, or ‘objectively reasonable basis, for

believing that he or she was investigating matters in support of a viable FCA case.”

Swanson v. Battery Park City Auth., No. 15-CV-6938 (JPO), 2016 WL 3198309, at *3

(S.D.N.Y. June 8, 2016) (internal quotation marks and citation omitted).

Ultimately, the conduct must be “directed at exposing a fraud upon the

government.” Mirza v. Garnet Health, No. 20-CV-556 (PMH), 2022 WL 826410, at

*9 (S.D.N.Y. Mar. 17, 2022) (internal quotation marks and citations omitted).

As explained above, the Second Circuit held that both Pilat and Maniscalco

engaged in protected activity under the statute. This Court must consider whether

12

the fourth amended complaint sufficiently alleges that Amedisys was aware of

Pilat’s and Maniscalco’s protected activity, and whether Amedisys took adverse

action against Pilat and Maniscalco because of their protected activity.

A. Pilat

The fourth amended complaint contains sufficient allegations regarding each

of the remaining two prongs as to Pilat.

Regarding Amedisys’s awareness of his protected activity, the fourth

amended complaint alleges that “Pilat relayed... nurses’ messages about unsafe

workload”—specifically, scheduled patient visits numbering fifteen to seventeen per

day, rather than the standard five to six—“to Amedisys supervisors.” Dkt. 82 J 127.

It also alleges that Pilat “notified management about the unsafe clinician

scheduling,” including telling Director of Operations Jake Wilkens, in a November

2016 email, that “he had to schedule visits for ‘3 times as many patients as was

safe.” Id. § 129. More generally, the fourth amended complaint alleges that, in

“several emails between .. . Pilat and his supervisor, Wilkens, .. . Pilat repeatedly

expressed concerns about the inability of the nurses and therapists to keep up with

Amedisys’s extensive volume of patients.” Id. § 177. These allegations plausibly

allege that Amedisys was aware of Pilat’s protected activity.

Amedisys argues that this conduct did not put it on notice to Pilat’s protected

conduct because his conduct amounted to raising concerns about patient scheduling,

which was within his job duties. See Dkt. 83-1, at 23-24. A job-duty argument

sometimes prevails, but not here.

13

The cases Amedisys relies on for application of this argument here are

distinguishable—especially against the backdrop of the Circuit’s decision in this

case. See Hennrick v. MIR Sci., LLC, No. 21 Civ. 4945 (LGS), 2021 WL 6052118, at

*1, *4 (S.D.N.Y. Dec. 21, 2021) (plaintiff “responsible for overseeing Defendant's

laboratory practices, complying with applicable FDA regulations, [and] applying for

and receiving [New York State Department of Health] ... approval” of Defendant’s

test did not put Defendant on notice of FCA violations by reporting issues with

submitted data because “it was Plaintiffs job to raise concerns about the accuracy of

data being submitted to the FDA and [the New York State Department of Health]

in Defendant’s applications”); Ortiz v. Todres & Co., No. 15 Civ. 1506 (LGS), 2019

WL 1207856, at *1, *5 (S.D.N.Y. Mar. 14, 2019) (plaintiff auditor did not put

defendant on notice of FCA violations by stating that “issuing the financial

statements any other way would be a misrepresentation” because plaintiff was not

“doing anything other than what he was hired to do”).

Here, by contrast, Pilat “was responsible for supporting the clinical

management teams, including scheduling staff for patient care and managing

patient referrals.” Dkt. 82 § 8. He was not responsible for alerting Amedisys to

concerns about patient care or safety. Pilat’s protected conduct of repeatedly

notifying his supervisor “about the inability of the nurses and therapists to keep up

with Amedisys’s extensive volume of patients,” including that “he had to schedule

visits for 3 times as many patients as was safe,” Dkt. 78, at 6-7 Gnternal quotation

marks omitted); see Dkt. 82 ¢ 129, went “beyond [his] assigned task,” and was thus

14

sufficient to put Amedisys on notice of that protected activity, see Ortiz, 2019 WL

1207856, at *5 (internal quotation marks and citation omitted).

The fourth amended complaint also plausibly alleges that Amedisys took

adverse action against Pilat because of his protected conduct. In particular, it

alleges that “Pilat was fired a short time after” his November 2016 email to Wilkens

expressing concerns about patient scheduling. Dkt. 82 129. Amedisys terminated

Pilat’s employment “in December 2016, at least in part for his refusal to be

complicit with the known fraudulent and dangerous conduct of Amedisys that

resulted in violations of the FCA.” Id. { 178. These allegations are sufficient for

Pilat’s retaliation claim to proceed to discovery. Compare Beckles-Canton v.

Lutheran Soc. Servs. of N.Y., Inc., No. 20 Civ. 48379 (KPF), 2021 WL 3077460, at *9-—

*10 (S.D.N.Y. July 20, 2021 (“A seven-month gap is itself ‘not prohibitively remote’

and [is] ‘within the temporal range that [the Second Circuit has] found sufficient to

raise an inference of causation.”) (citations omitted), and United States v. N. Adult

Daily Health Care Ctr., 205 F. Supp. 3d 276, 300 (E.D.N.Y. 2016) (denying motion to

dismiss FCA retaliation claim where plaintiff met with employer “in January of

2010 to respond to his complaints and . . . was constructively discharged in April of

2010”), with McAllan v. Von Essen, 517 F. Supp. 2d 672, 686 (S.D.N.Y. 2007)

(granting summary judgment for defendant on FCA retaliation claim, in part

because “plaintiff had continued to work for almost three years after commencing

his FCA action without incident”).

15

Amedisys argues that the fourth amended complaint does not sufficiently

allege but-for causation as to Pilat’s termination. See Dkt. 83-1, at 24-25. The

allegation that Pilat was terminated “at least in part for” his protected conduct

(Dkt. 82 J 178) is not inconsistent with but-for causation. If, for example, there was

some deficiency with Pilat’s job performance that Amedisys was willing to endure

until Pilat expressed concerns about patient care and volume of cases assigned to

nurses, then Pilat’s protected conduct would be a but-for cause for his termination.

Any evidence will be revealed—or not—during discovery. And Amedisys may raise

that issue again at summary judgment.

B. Maniscalco

As to Maniscalco’s retaliation claim, Amedisys challenges only the third

prong: whether Amedisys took adverse action against Maniscalco because of his

protected activity. The Court, therefore, will only briefly address the notice prong.

The fourth amended complaint alleges that, “on numerous occasions, . . .

Maniscalco reported concerns about the admission of and continued treatment of

patients who were either not homebound or otherwise not covered by Government

Funded Healthcare Programs, which resulted in violations of the FCA.” Dkt. 82

4 179. It further alleges that, “when... Maniscalco raised his concerns to Wilkens

in May 2017, Wilkens told him his goal was to ensure the ‘best possible outcome for

reimbursement.” Jd. § 180. These allegations satisfy the notice prong of

Maniscalco’s retaliation claim.

16

Amedisys argues that the fourth amended complaint does not sufficiently

allege that Maniscalco was terminated because of his protected conduct because the

claim relies solely on the timeframe of his termination in relation to his protected

conduct. See Dkt. 83-1, at 25-26. The fourth amended complaint alleges that, “[a]s

a result of his complaints, and refusal to comply with the continued fraudulent

conduct, ... Maniscalco was terminated on June 7, 2017, less than a month after

[his May 2017] conversation [with Wilkens].” Dkt. 82 § 181. This alleged temporal

proximity, combined with the allegations about Maniscalco’s protected conduct,

satisfies the causation prong at this stage. See Beckles-Canton, 2021 WL 3077460,

at *9-—*10; N. Adult Daily Health Care, 205 F. Supp. 3d at 300.

II. The Fourth Amended Complaint Sufficiently States FCA Violations

Amedisys also seeks dismissal of Relators’ claims for presentation of false

claims and making or using a false record—based both on Chorches and substantive

deficiencies. Each argument fails.

A. The Fourth Amended Complaint Satisfies Chorches

Relators must rely on Chorches to plead their FCA violations because they do

not allege the actual submission of false claims.? The Second Circuit has concluded

that Relators did not allege sufficient facts to demonstrate that billing information

was peculiarly within Amedisys’s knowledge—in other words, they did not satisfy

7 See Chorches, 865 F.3d at 82~83 (recognizing that, that, in some cases, a plaintiff

may satisfy the more rigid pleading requirements of Rule 9(b) by (1) asserting

specific reasons why such information is peculiarly within another’s knowledge, and

(2) providing “specific facts supporting a strong inference of fraud”) (internal

quotation marks omitted).

17

the first Chorches prong. Dkt. 78, at 11-12. It noted that Relators could cure this

deficiency by (1) explaining “any distinction between the treatment forms they had

access to and the actual bills that comprised the false claims,” (2) “reconcil[ing] their

access to some forms used by the billing department with their allegations that the

billing department operated out of their purview,” and (8) “describ[ing] their digital

access to treatment and billing records at Amedisys, and explain[ing] whether and

how they could virtually access the billing records at issue.” Id. at 15-16 (emphasis

in original). Because the fourth amended complaint does so, it alleges FCA

violations with sufficient specificity.

First, the fourth amended complaint describes, in detail, Amedisys’s

structure—including its “billing procedures[, which] are... layered and

compartmentalized, giving only Amedisys’s central billing department (located in

Baton Rouge, LA) access to the actual bills submitted to the Government.” Dkt. 82

4, 157; see also id. §| 158 (describing structure of nationwide branches, regions, local

branches, and regional groups). Each branch had a business office manager, whose

“primary responsibility, as it related to patient billing, was to ensure that all the

information necessary for converting clinical therapy services into bills was

completed, including patient treatment/evaluation forms and OASIS assessments.”8

Id. § 159.

8 OASIS is Outcome and Assessment Set, which is a tool to “determine the patient’s

care needs,” using clinical, functional, and service factors, that helps nurses

evaluate eligibility for Medicare home health care. Id. { 55.

18

Relators worked at Amedisys’s Amherst, New York facility. Id. 4 8 (Pilat), 9

(Maniscalco). The assistant director of operations responsible for Amherst, and

Maniscalco’s direct supervisor, was Sue Troy, who reported to Director of

Operations Jake Wilkens. Jd. {| 10, 11. Wilkens “oversaw the operations of the

individual facility.” See id. 158. Troy “had a team of clinicians or therapists that

worked for [her] out in the field handling patient visits.” See id.; see also id. | 160

(assistant directors of operations “directly managed therapists who worked in the

field”).

Second, the fourth amended complaint explains the software Amedisys used

for clinical information. Each therapist, including Maniscalco, “was issued a tablet,

which gave [him or her] access to a software tool called ‘PointCare.” Id. § 160.

PointCare assisted with “collection of all pertinent treatment and OASIS

information for a given patient.” Id. § 161. It was “a central portal for the

collection of all clinical information that was later used to support the conversion of

services into bills.” Id. Therapists used PointCare to submit “OASIS assessment|s]

and their clinical treatment and evaluation forms,” usually “following the initial

visit[,] which documented . . . the patient condition and prescribed treatment

regimen.” Id. { 162; see also id. § 170 (“Maniscalco’s Amedisys tablet enabled him

to submit his OASIS assessments and clinical treatment forms through

PointCare.”).

Next, the fourth amended complaint details how the treatment-related forms

were submitted for billing. Business office managers ensured that all necessary

19

forms were completed in PointCare, approved them, and “submitted [them] to a

centralized billing department at Amedisys headquarters in Baton Rouge, LA.” Id.

{| 164; see also id. § 172. “All patient billing” occurred “at this centralized location],

and] no government patient billing was conducted at a local branch facility.” Jd.

] 164; see also id. { 173.

Finally, the fourth amended complaint contrasts the treatment-related forms

Relators did have access to, with the billing information that they did not have

access to. Relators allege that neither of them “had any access to the compilation, .

maintenance, or submission of bills or invoices to Government Funded Healthcare

Programs’ because “Amedisys operated an off-site billing department that gathered

treatment forms submitted by therapists detailing information collected during

patient visits and converted those treatment forms to billings to the Government.”

Id. { 166. Not only that, but even area vice presidents, directors of operations,

assistant directors of operations, and business office managers lacked access to

specific patient billing information; they “had access [only] to certain aggregated

treatment and revenue data used evaluate performance and set business targets.”

Id. { 165.

Pilat, specifically, “had no access to any internal digital billing systems or

billing software.” Id. § 167. He “was provided a workstation with a computer and

an email address,” but “the vast majority of [his] work was conducted with paper

scheduling records.” Jd. His responsibilities were limited to “coordinating the

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schedules of nurses and therapists”—clinicians in the field—“with whom he

communicated via email.” Id.

Maniscalco worked primarily offsite, “travel[ing] from his home directly to

patients’ homes and rehabilitation facilities to provide home health services nearly

every day.” Id. J 168. He occasionally “attend[ed] meetings at the Amedisys branch

to discuss his patients, patient loads, and patient treatments,” but this was “the

only time he was onsite at an Amedisys office.” Id. “Specific patient billing detail

was never discussed at these meetings.” Id. 169.

As described above, Maniscalco had access to treatment-related forms. But

those forms “contained only relevant clinical, treatment information, including

patient identification information, patient conditions, and patient treatments.” Jd.

4171. They “did not contain any billing information, such as treatment codes,

billing dates, or billing amounts.” Id. Occasionally, Maniscalco could “view

treatment forms that had been changed by off-site coding specialists in the

PointCare software portal,”? but “the changes related only to the types of

treatments he performed and the conditions of the patients.” Id. J 174. He did

not—and could not—see patient billing information “because PointCare did not

store patient specific billing information,” and PointCare “was the only Amedisys

program he had access to.” Id.

9 Relators allege that remote coding specialists sometimes “unilaterally

manipulated the treatment forms to falsely enhance Amedisys’s reimbursements

from Government Funded Healthcare Programs,” including by “fabricat[ing] patient

conditions, treatment severity, and duration” to “maximize reimbursement.” Id.

163.

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In sum, Relators allege that neither Pilat nor Maniscalco had “information

regarding what was included in the bills, how the bills were created, how the bills

were submitted, when the bills were submitted, or who at Amedisys specifically was

responsible for processing the bills,” and they did not have access to any of this

information. Id. § 175.

These allegations address each category of information the Second Circuit

suggested could cure the pleading defects with Relators’ prior complaint and,

thereby, satisfy Chorches.!° They explain the difference between treatment forms

and bills, which were generated based on information in the treatment forms, but

separately from them. The additional allegations explain how Maniscalco had

access only to the treatment-related information and the software platform through

which such information was transmitted, and Pilat did not even have access to that

software. Finally, the additional allegations clarify that the billing information was

both physically and electronically segregated from Pilat, Maniscalco, and the

Amherst branch—and that neither Relator could access bills or billing information,

either physically or digitally.

10 These allegations also are similar to those in Chorches, where the Second Circuit

concluded that the relators satisfied the first prong. See Chorches, 865 F.3d at 82

(complaint alleged that all ambulance personnel (like the relator) generally were

unable to enter the administrative building where billing took place and were not

able to participate in billing procedures; these particular circumstances “made it

virtually impossible for most employees to have access to all of the information

necessary to certify on personal knowledge both that a particular invoice was

submitted for payment and that the facts stated to justify the invoice were false”).

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The fourth amended complaint, therefore, alleges FCA violations with

sufficient specificity, pursuant to Chorches.

B. Relators Allege Sufficient Theories of Falsity to Support Their

FCA Claims

Amedisys also challenges the substance of Relators’ FCA violations. In

particular, Amedisys argues that Relators fail to allege falsity because several

alleged theories of falsity do not concern illegal or fraudulent conduct to support an

FCA violation, and that Relators do not allege false certification. See Dkt. 83-1, at

18-21. Because the Second Circuit endorsed certain theories of falsity that also

appear in the fourth amended complaint, the Court concludes that the complaint

sufficiently alleges FCA violations.

To state a claim under Sections 3729(a)(1)(A) and (B), a plaintiff must allege

that “(1) defendant submitted a claim for payment to the government, (2) the claim

for payment was false or misleading, (3) the defendant acted knowingly in making

that false or misleading claim for payment, and (4) the false or misleading

statement was material to the government’s decision to pay.” United States ex rel.

Bonzani v. United Techs. Corp., No. 3:16-CV-1730 (JCH), 2019 WL 5394577, at *2

(D. Conn. Oct. 22, 2019) (citing Chorches, 865 F.3d at 81).

Here, Relators allege various theories of falsity as the basis for their FCA

claim, including: (1) improperly recruiting and enrolling patients; (2) providing,

and billing for, unnecessary and/or non-covered patient treatments;

(3) fraudulently billing for services not rendered or improperly rendered;

(4) upcoding services provided to patients; and (5) falsifying time entries by making

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it appear that therapists spent longer with patients than they did. See Dkt. 82

4] 66(a)—-(e). They also allege specific examples to support these theories, as

discussed in more detail above. Together, these allegations underlie Relators’

claim that:

by providing medically unnecessary treatments to ineligible patients,

as well as falsifying patients’ medical reports and plans of care in

order to seek reimbursements for conditions that were more severe

than in reality and for durations longer than medically necessary,

Amedisys “knowingly present[ed], or cause[d] to be presented, to an

officer or employee of the United States Government or a member of

the Armed Forces of the United States a false or fraudulent claim for

payment or approval” in violation of 31 U.S.C. § 3729(a)(1).

Dkt. 82 | 184.

Amedisys focuses on Realtors’ improper recruitment/enrollment and

fraudulent billing theories, implicitly conceding that the remaining three theories

are sufficient to support an FCA violation. See Dkt. 83-1, at 18 (“[S]ome of

Relators’ legal theories .. . do not involve conduct that was improper, and these

theories ... cannot support a violation of the FCA.”). Indeed, Amedisys must so

concede because the Second Circuit recognized providing medically unnecessary

treatments and falsifying time sheets as fraud. Dkt. 78, at 6-7, 9-10; see also Dkt.

87 (transcript of oral argument), at 36 (“Medical necessity, falsification of time

records, we agree that those are two theories [for which] the Second Circuit found a

sufficient inference of fraud.”).

The Second Circuit’s decision, along with Amedisys’s resulting concessions,

allow Relators’ claim for presenting a false claim to survive. With a surviving FCA

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claim, the Court declines Amedisys’s invitation to cull theories of falsity.1! The

parties will be able to address these issues during discovery and then, if

appropriate, at summary judgment.!2

C. Relators Sufficiently Allege a False-Records Claim

Amedisys argues that the Court should dismiss Relators’ false-records claim

because Relators (1) do not sufficiently allege false claims, and (2) do not plead the

false contents of the Form 485s, upon which their false records claim rely, with

sufficient specificity. See Dkt. 83-1, at 22; Dkt. 85, at 12. For the reasons

discussed earlier in this section, the fourth amended complaint alleges FCA

violations with sufficiently specificity. See supra Sections II.A & II.B. The Court,

therefore, denies Amedisys’s motion to dismiss Relators’ false-records claim.

11 At oral argument, defense counsel conceded that it would be helpful—perhaps,

more efficient—to trim Relators’ theories from the complaint at the motion-to-

dismiss stage, but that the parties could address Amedisys’s arguments later in the

case. See Dkt. 87, at 37.

12 Along the same lines, because the fourth amended complaint sufficiently alleges

an FCA violation via a direct false claim, the Court need not resolve Amedisys’s

arguments regarding false certification, at this time. See Dkt. 87 (transcript of oral

argument), at 39-44.

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CONCLUSION

For the reasons discussed above, the Court has DENIED Amedisys’s motion

to dismiss the fourth amended complaint (Dkt. 83). Based on Relators’ counsel’s

agreement, see Dkt. 87, at 44, the Clerk of Court shall terminate Does 1-100 as

Defendants in this case.

SO ORDERED.

Dated: February 7, 2025

Buffalo, New York .

| Som f Aretha, fp

JOHN L. SINATRA, JR.

UNITED STATES DISTRICT JUDGE

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