United States District Court, D. Delaware
UNITED STATES OF AMERICA and STATE OF DELAWARE, ex rel, TERESA KELLY, Plaintiffs
SELECT SPECIALTY HOSPITAL-WILMINGTON, INC., et al., Defendants
CHRISTOPHER C. CONNER, CHIEF JUDGE
tarn plaintiff Teresa Kelly ("Kelly")
commenced this action against defendants Select Specialty
Hospital-Wilmington, Inc. (the "hospital"), Select
Specialty Hospitals, Inc., Select Employment Services, Inc.,
Select Medical Corporation ("Select Medical")
(collectively, the "Select defendants"), and
Crystal Cheek ("Cheek") pursuant to the False
Claims Act ("FCA"), 31 U.S.C. § 3729 et
seq., and the Delaware False Claims and Reporting Act,
Del. Code. Ann. tit. 6 §§ 1201-11. (See
Doc. 16). Before the court is a motion (Doc. 17) to dismiss
filed by the Select defendants pursuant to Federal Rule of
Civil Procedure 12(b)(6). For the reasons that follow, the court
will grant in part and deny in part the motion.
Factual Background & Procedural History
is the chief nursing officer at the hospital, which provides
long-term acute care. (Doc. 16 ¶¶ 6, 27). She has
held this position since September 2014. (Id. ¶
6) As chief nursing officer, Kelly "oversees [the]
day-to-day operations" of hospital staff, clerks, and
technicians. (Id.) She also serves on the
hospital's medical executive committee. (Id.)
Select defendants receive payment from Medicare, Medicaid,
and the Federal Employee Health Benefits Program
(collectively, "state and federal healthcare
programs") as reimbursement for certain medical services
performed. (See id. ¶¶ 23, 30). Payment
from these state and federal healthcare programs is
conditioned upon certification (or recertification) from a
physician, nurse practitioner, or clinical nurse specialist
(collectively, "medical practitioners") that the
medical service rendered was necessary. (Id.
¶¶ 17, 23, 25, 30-31). The hospital is required to
ensure that all medical practitioners are credentialed.
(Id. ¶ 35).
was the hospital's health information management manager
from 2008 until January 2016. (Id. ¶¶ 38,
62). As manager, Cheek was responsible for ensuring that the
hospital's medical records complied with federal and
state regulations. (Id. ¶ 39). After she
reviewed these records, Cheek submitted them to Select
Medical's corporate office for "coding and billing
to the [f]ederal and [s]tate [h]ealthcare [p]rograms."
(Id. ¶ 45; see also id. ¶ 35).
Cheek was also responsible for ensuring that medical
practitioners responsible for treating patients were
"properly credentialed." (Id. ¶ 40).
took a medical leave of absence in March 2015, and Kathleen
Dawiedczyk ("Dawiedczyk") temporarily assumed
Cheek's responsibilities. (Id. ¶ 42). That
same month, Dawiedczyk discovered that Cheek kept cut-outs of
medical practitioners' signatures underneath her desk
calendar. (Id. ¶ 43; see also Doc.
16-1). Dawiedczyk purportedly showed these cut-outs to Kelly.
(Doc. 16 ¶ 43).She also showed Kelly a previously
discharged patient's chart where Cheek had used the
cut-outs to forge the signatures of medical practitioners for
services charged to federal and state healthcare programs.
(Id.) Kelly allegedly reported what she saw to the
hospital's chief executive officer, Sharon Rosetti
("Rosetti"). (Id. ¶ 47).
returned to work in April 2015 and allegedly "continued
to forge [medical practitioners'] signatures on unsigned
medical records." (Id. ¶ 51). In September
2015, the hospital hired Donna Gares ("Gares") as
its new chief executive officer. (Id. ¶ 53).
Kelly told Gares about Cheek's conduct shortly after
Gares was hired. (Id.) Two months later, health
information management assistant Katie Desmond allegedly
showed Kelly additional medical records "in which Cheek
had forged medical practitioner signatures."
(Id. ¶ 54). Kelly immediately approached Gares
about Cheek's conduct. (Id. ¶ 55). Kelly
discovered five more patient charts purportedly containing
forged signatures in January 2016, and again reported
Cheek's conduct to Gares. (Id. ¶¶
57-58). After this third meeting, Gares "initiated an
investigation" into Cheek's actions. (Id.)
The hospital fired Cheek on January 26, 2018. (Id.
¶ 62). Kelly contends that Gares's investigation
also revealed that Cheek "had not been examining the
credentials of medical practitioners." (Id.
February 2016, Kelly spoke with Robert Breighner
("Breighner"), Select Medical's Vice President
of Compliance and Audit Services. (Id. ¶ 66).
Kelly expressed to Breighner her frustration regarding the
manner in which the Select defendants handled
"Cheek's forging of medical practitioner
signatures." (Id.) Breighner responded that
Cheek's conduct was "not a reportable offense to any
government entity" because it was a "he said, she
said situation." (Id.) Breighner further
indicated that "he 'was comfortable with the charts
at risk.'" (Id.)
contends that the Select defendants violated the FCA and the
Delaware False Claims and Reporting Act by submitting claims
for reimbursement to federal and state healthcare programs
premised on medical records that contained forged signatures.
(Id. ¶¶ 72-77). She avers that the federal
and state healthcare programs would not have remitted payment
to the Select defendants had they known the signatures were
forged. (Id. ¶¶ 78-79). Kelly also
contends that the Select defendants violated the FCA and the
Delaware False Claims and Reporting Act by failing to ensure
that medical practitioners were credentialed. (Id.
commenced the instant action on May 12, 2016, (Doc. 2), and
filed an amended complaint (Doc. 16) on May 17, 2017. She
asserts four claims: presenting or causing presentment of a
false claim under 31 U.S.C. § 3729(a)(1)(A) (Count I);
knowingly presenting a false or fraudulent record under 31
U.S.C. § 3729(a)(1)(B) (Count II); knowingly making a
"reverse false claim" under 31 U.S.C. §
3729(a)(1)(G) (Count III); and violation of the Delaware
False Claims and Reporting Act, Del. Code. Ann. tit. 6
§§ 1201-11 (Count IV). (Id.) The Select
defendants move to dismiss the amended complaint in its
entirety under Federal Rule of Civil Procedure 12(b)(6).
(Doc. 17). The motion is fully briefed and ripe for
12(b)(6) of the Federal Rules of Civil Procedure provides for
the dismissal of complaints that fail to state a claim upon
which relief may be granted. Fed.R.Civ.P. 12(b)(6). When
ruling on a motion to dismiss under Rule 12(b)(6), the court
must "accept all factual allegations as true, construe
the complaint in the light most favorable to the plaintiff,
and determine whether, under any reasonable reading of the
complaint, the plaintiff may be entitled to relief."
Phillips v. Cty. of Allegheny. 515 F.3d 224, 233 (3d
Cir. 2008) (quoting Pinker v. Roche Holdings. Ltd..
292 F.3d 361, 374 n.7 (3d Cir. 2002)). In addition to
reviewing the facts contained in the complaint, the court may
also consider "matters of public record, orders,
exhibits attached to the complaint and items appearing in the
record of the case." Oshiver v. Levin. Fishbein.
Sedran & Berman. 38 F.3d 1380, 1384 n.2 (3d Cir.
1994); Pension Benefit Guar. Corp. v. White Consol.
Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993).
notice and pleading rules require the complaint to provide
"the defendant fair notice of what the . . . claim is
and the grounds upon which it rests." Phillips,
515 F.3d at 232 (alteration in original) (quoting Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). To
test the sufficiency of the complaint, the court conducts a
three-step inquiry. See Santiago v. Warminster Twp.,
629 F.3d 121, 130-31 (3d Cir. 2010). In the first step,
"the court must 'tak[e] note of the elements a
plaintiff must plead to state a claim.'"
Id. at 130 (alteration in original) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009)). Next,
the factual and legal elements of a claim must be separated;
well-pleaded facts are accepted as true, while mere legal
conclusions may be disregarded. Id. at 131-32;
see Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11
(3d Cir. 2009). Once the court isolates the well-pleaded
factual allegations, it must determine whether they are
sufficient to show a "plausible claim for relief."
Iqbal 556 U.S. at 679 (citing Twombly, 550
U.S. at 556); Twombly, 550 U.S. at 556. A claim is
facially plausible when the plaintiff pleads facts "that
allow the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged."
Iqbal 556 U.S. at 678.
claims are subject to the heightened pleading standard set
forth in Federal Rule of Civil Procedure 9(b). United
States ex rel. Petras v. Simparel, Inc., 857 F.3d 497,
502 (3d Cir. 2017). Rule 9(b) mandates that a party alleging
fraud or mistake "state with particularity the
circumstances constituting fraud or mistake."
Fed.R.Civ.P. 9(b). Its purpose is to notify defendants
"of the precise misconduct with which they are charged,
and to safeguard defendants against spurious charges of. . .
fraudulent behavior." Smith v. Carolina Med.
Ctr., 274 F.Supp.3d 300, 308 (E.D. Pa. 2017) (quoting
Seville Indus. Mach. Corp. v. Southmost Mach. Corp.,
742 F.2d 786, 791 (3d Cir. 1984)).
motion to dismiss stage, an FCA claimant must allege
"particular details of a scheme to submit false claims
paired with reliable indicia that lead to a strong inference
that claims were actually submitted." Foglia v.
Renal Ventures Mgmt., LLC, 754 F.3d 153, 157-58 (3d Cir.
2014) (quoting United States ex rel. Grubbs v.
Kanneganti, 565 F.3d 180, 190 (5th Cir. 2009)). They
should allege "'the who, what, when, where[, ] and
how of the events'" constituting the fraud.
United States ex rel. Customs Fraud Investigations, LLC
v. Victaulic Co., 839 F.3d 242, 272 (3d Cir. 2016)
(quoting United States ex rel. Moore & Co., P.A. v.
Majestic Blue Fisheries, LLC, 812 F.3d 294, 307 (3d Cir.
2016)). "Describing a mere opportunity for fraud will
not suffice, " but a '"representative
sample' of the ...