United States of America, ex rel. Stephanie Strubbe; Carmen Trader; Richard Christie, relators Plaintiffs - Appellants
Crawford County Memorial Hospital; Bill Bruce, Individually Defendants - Appellees
Submitted: November 13, 2018
from United States District Court for the Northern District
of Iowa - Sioux City
BENTON, BEAM, and ERICKSON, Circuit Judges.
BENTON, CIRCUIT JUDGE.
A. Strubbe, Carmen Trader, and Richard Christie sued Crawford
County Memorial Hospital (CCMH) as relators in a qui tam
action for violations of the False Claims Act. 31 U.S.C.
§ 3729(a). They also sued CCMH and its Chief Executive
Officer, Bill Bruce, for violating the FCA's
anti-retaliation provision. § 3730(h). The district
court granted CCMH's motion to dismiss all
counts of the complaint, except Strubbe's retaliation
claim. As for it, the district court granted CCMH's
motion for summary judgment. Strubbe v. Crawford Cty.
Mem'l Hosp., 2017 WL 8792692 (N.D. Iowa Dec. 6,
2017). Having jurisdiction under 28 U.S.C. § 1291, this
County Memorial Hospital is a county-owned nonprofit hospital
in Iowa. In April 2012, Bruce became its Chief Executive
CCMH, Strubbe was an Emergency Medical Technician (EMT), and
Christie and Trader were paramedics. They filed a sealed qui
tam complaint as relators in April 2015. The United States
declined to intervene. The relators filed an amended
complaint. It alleges that CCMH submitted false claims for
Medicare reimbursement and made false statements or reports
to get fraudulent claims paid. Specifically, Count I alleges
that CCMH violated the FCA by submitting (1) claims for
breathing treatments administered by paramedics; (2) claims
for laboratory services done by paramedics and EMTs; (3)
claims with false credentials of service providers; (4)
claims for EMT and paramedic services at Eventide, L.L.C. and
Denison Care Center; and (5) cost reports with improper
reimbursements and payments to vendors for non-CCMH expenses.
Count II alleges CCMH knowingly made or used false statements
to get false claims paid, including (1) records documenting
breathing treatments at 30 minutes; (2) records listing
paramedics as "specialized ancillary staff" for
breathing treatments; (3) reimbursement requests and invoices
for improper payments for non-CCMH expenses; (4) documents
with false credentials for emergency medical staff; and (5)
cost reports with false costs. Count III alleges that CCMH
conspired with Eventide to violate the Anti-Kickback Statute,
42 U.S.C. § 1320a-7b.
Trader, and Christie also sued CCMH and Bruce for violating
the FCA's anti-retaliation provision. According to the
complaint, Strubbe began reviewing hospital financial
documents in July 2014. Soon after, she "spoke to all
Board members about the financial situation of CCMH [and] her
belief that the finances were not adding up." In
November, Strubbe tore her rotator cuff at work. Initially,
CCMH put her on "light duty." In July 2015,
however, CCMH told Strubbe her light-duty assignments were a
financial hardship for the hospital and moved her to
part-time status. CCMH removed Strubbe from part-time status
in March 2016 (effectively a termination).
and Trader also began investigating CCMH's finances in
2014. They complained to other hospital staff that
"there was something wrong with the changes in the
breathing treatments." Christie also complained there
was "potentially something wrong with the financial
statements provided by CCMH to the Board." In January
2015, Christie reported to her supervisor that Jonathan
Richard was "not properly licensed" as a paramedic.
Both Christie and Trader then reported the license violation
to the Iowa Department of Public Health. Four months later,
CCMH transitioned Christie from night shifts to day shifts.
It terminated Christie later that month for speeding while
driving an ambulance. Trader still works at CCMH as a
paramedic, but claims that it subjects him to harrassment and
other discriminatory treatment.
moved to dismiss the complaint. The district court dismissed
the substantive FCA claims for failure to plead with
particularity because the complaint did not set forth facts
showing any false claims were submitted, or plead how the
relators acquired this information. It also dismissed
Christie and Trader's retaliation claims as not stating a
plausible claim for relief. However, the court denied
CCMH's motion to dismiss Strubbe's retaliation claim.
CCMH then moved for summary judgment on it. Concluding that
Strubbe could not prove a prima facie case of retaliation,
the district court granted summary judgment to CCMH.
court reviews de novo the district court's dismissal of a
claim under Rule 9(b), "accepting the allegations
contained in the complaint as true and drawing all reasonable
inferences in favor of the nonmoving party." United
States ex rel. Joshi v. St. Luke's Hosp., Inc., 441
F.3d 552, 555 (8th Cir. 2006). The False Claims Act (FCA)
imposes liability on anyone who "knowingly presents, or
causes to be presented, a false or fraudulent claim for
payment or approval" or who "knowingly makes, uses,
or causes to be made or used, a false record or statement
material to a false or fraudulent claim." 31 U.S.C.
§ 3729(a)(1)(A)-(B). "The FCA attaches liability,
not to the underlying fraudulent activity, but to the claim
for payment." Olson v. Fairview Health Servs. of
Minn., 831 F.3d 1063, 1070 (8th Cir. 2016). Qui tam
provisions permit private persons, relators, to sue for
violations in the name of the United States and to recover
part of the proceeds if successful. § 3730(b), (d).
the FCA is an anti-fraud statute, complaints alleging
violations of the FCA must comply with Rule 9(b)."
Joshi, 441 F.3d at 556. Under Rule 9(b), "a
party must state with particularity the circumstances
constituting fraud or mistake." This gives defendants
notice and protects them from baseless claims. United
States ex rel. Thayer v. Planned Parenthood of the
Heartland, 765 F.3d 914, 918 (8th Cir. 2014). While Rule
9(b) is "context specific and flexible,"
id., a plaintiff cannot meet this burden with
conclusory and generalized allegations. Joshi, 441
F.3d at 557. Where "the facts constituting the fraud are
peculiarly within the opposing party's knowledge,"
the "allegations may be pleaded on information and
belief" if "accompanied by a statement of facts on
which the belief is founded." Drobnak v. Andersen
Corp., 561 F.3d 778, 783-84 (8th Cir. 2009).
satisfy the particularity requirement for FCA claims,
"the complaint must plead such facts as the time, place,
and content of the defendant's false representations, as
well as the details of the defendant's fraudulent acts,
including when the acts occurred, who engaged in them, and
what was obtained as a result." Joshi, 441 F.3d
at 556. A relator can meet the Rule 9(b) requirements by
pleading (1) "representative examples of the false
claims," or (2) the "particular details of a scheme
to submit false claims paired with reliable indicia that lead
to a strong inference that claims were actually
submitted." Thayer, 765 F.3d at 918. To satisfy
the particular details requirement, the complaint must
"provide sufficient details to enable the defendant to
respond specifically and quickly to the potentially damaging
allegations." Id. at 918-19.
Count I, the relators contend that CCMH submitted false
claims through a wide-ranging fraudulent scheme. First, the
complaint alleges that shortly after Bruce became CEO, CCMH
required paramedics to perform breathing treatments
previously provided by nursing staff. Hospital management
told employees this change was for "billing" and
"cost reimbursement purposes" and required them to
document each treatment at 30 minutes, regardless of its
length. The complaint alleges-upon information and
belief-that these changes allowed CCMH to bill these
treatments separately to get a higher reimbursement from
Medicare. Further, the complaint alleges that CCMH treats
paramedics as "specialized staff," making the
treatments separately billable. Relators also contend-upon
information and belief-that patients are receiving breathing
treatments who do not need them.
the complaint alleges that CCMH ordered paramedics and EMTs
to perform laboratory services, like blood draws. The
relators claim-upon information and belief-that this change,
like the breathing treatments, was intended to increase
Medicare reimbursement by allowing CCMH to bill these
services separately. Third, the complaint identifies three
employees with misclassified titles. For example, the
complaint alleges-upon information and belief-that CCMH
billed Medicare for Richard's services as a paramedic,
though he was "not properly licensed." Fourth, the
relators claim paramedics and EMTs provided services at two
other health care facilities-Eventide and Denison. Based on
information and belief, CCMH instituted this change to
increase Medicare reimbursement. Finally, the complaint
alleges that CCMH reported improper expenses to Medicare.
Relators contend-upon information and belief-that CCMH
submitted cost reports to Medicare with payments to
Bruce's relatives above the market value and with
duplicate payments to the credit card companies and the
did not plead representative samples of false claims. In
Joshi, a hospital anesthesiologist brought a qui tam
claim alleging that the hospital sought Medicare
reimbursements at higher rates and submitted claims for
services and supplies not provided. Joshi, 441 F.3d
at 554. Joshi did not provide representative samples, but
alleged that every claim over a sixteen-year period was
fraudulent. Id. at 556-57. Though Rule 9(b) does not
require alleging the "specific details of every
alleged fraudulent claim," this court dismissed
Joshi's claim because a relator "must provide
some representative ...