United States ex rel. Bruno v. Schaeffer

328 F. Supp. 3d 550
CourtDistrict Court, M.D. Louisiana
DecidedJune 18, 2018
DocketCIVIL ACTION NO.: 16-00001-BAJ-EWD
StatusPublished
Cited by1 cases

This text of 328 F. Supp. 3d 550 (United States ex rel. Bruno v. Schaeffer) is published on Counsel Stack Legal Research, covering District Court, M.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Bruno v. Schaeffer, 328 F. Supp. 3d 550 (M.D. La. 2018).

Opinion

BRIAN A. JACKSON, CHIEF JUDGE

Before the Court are the Motions to Dismiss (Doc. 35 and 39) filed by Defendants Alpha Labs, L.L.C., Beta Labs, L.L.C., Gamma Labs, L.L.C., MedComp Laboratory Sciences, L.L.C., MedComp Sciences, L.L.C., Brad Schaeffer, Sigma Labs, L.L.C., Javid Janani, Lisa Janani, and Quantum Laboratories, L.L.C. Plaintiff-Relators Albert Bruno and Alex Strahan filed oppositions, (Docs. 45 and 48), and Defendants filed replies. (Docs. 51 and 52). For the following reasons, the Motions to Dismiss (Doc. 35 and 39) are *555GRANTED IN PART and DENIED IN PART .

I. BACKGROUND

Plaintiff-Relators, two former employees of a large medical laboratory called MedComp Laboratory Sciences, L.L.C. and MedComp Sciences, L.L.C ("MedComp") allege that Defendants conspired to defraud the United States out of millions of dollars arising from fraudulent Medicare and Medicaid claims. (Doc. 1 at ¶ 2). Relators allege that Defendants offered physicians ownership interests in labs called Physician Owned Labs ("POL"), which existed in name only, and they received payments from the labs in proportion to the number of urine specimens the physicians sent to a different lab called Quantum for urine testing covered by private insurance. Id. at ¶ 3. Relators also allege that the scheme incentivized the same doctors to send their urine specimens covered by Medicare and Medicaid to another lab called MedComp. Id. at ¶ 109.

Relators allege that the scheme began in early 2013, when Brad Schaeffer, the owner of MedComp, called a companywide meeting for Quantum and MedComp to present the POL model. Id. at ¶ 23, 60. Schaeffer allegedly instructed MedComp's sales representatives to promote the POL model to doctors to induce them to send urine specimens covered by private insurance to Quantum and urine specimens covered by Medicare and Medicaid to MedComp. Id. at ¶ 60. Relators allege that Brad Schaeffer, Lisa Janani, and Javid Janani formed entities called Alpha, Beta, Gamma, and Sigma as POLs. Id. at ¶ 62. Relators, however, allege that these labs existed in name only and did not physically exist, and were not licensed labs. Id. at ¶ 62.

Relators allege that when participating physicians referred specimens to the POLs, the POLs would bill Quantum for urine tests, and then Quantum would pay the POLs for the tests. Id. at ¶ 74. The revenue paid to the physicians was proportionate to the amount of specimens they sent to Quantum. Id. MedComp allegedly only allowed physicians who were willing to send specimens to Quantum to buy shares in the POLs. Id. at ¶ 77. Relators also allege that Schaeffer instructed MedComp's sales representatives to encourage the physicians to send their Medicare and Medicaid specimens to MedComp because Quantum and MedComp, through the POLs, were providing the physicians with a financial incentive to do so. Id. at ¶ 77. As of December of 2014, all physicians who sent specimens to Quantum for private insurance reimbursements also sent specimens covered by Medicare and Medcaid to MedComp. Id. at ¶ 79.

In early 2014, Relator Albert Bruno, a Medcomp sales manager, allegedly presented a subscription agreement for a POL to a physician, but after the physician's attorney concluded that the POL model was not legal, the physician did not invest in the POL. Id. at ¶ 93. Relator Bruno then raised the legality of the POL program to Brad Schaeffer, an owner of MedComp because Bruno was concerned the program violated statues prohibiting self-referral schemes. Id. at ¶ 94. Rather than responding to Bruno's concerns, Schaeffer allegedly labeled Bruno a "trouble maker" who needed to be controlled. Id. at ¶ 95. As of December 2014, about sixty-one doctors in seven states had ownership interests in the POLs. Id. ¶ 107. Relators also allege that the POL model encouraged doctors to act based on financial gain and not patients' best interest. Id. at ¶ 116.

In total, Relators claim that between April 2013 and November 2014, over 15,000 urine specimens were sent to Quantum from doctors participating in the POL

*556scheme. Id. at ¶ 118. According to Relators, between April 2012 and January 2016, private insurance companies paid Quantum $12 million for urine tests and from April 2013 through December 2014 MedComp has been paid $46 million. Id. at ¶ 119-120. Relators further claim that between April 2013 and January 2016, Medicare and Medicaid paid MedComp $18 million for specimens originating from doctors participating in the POL scheme. Id. at ¶ 121.

Relators claim that Defendants violated the False Claims Act ("FCA"), 31 U.S.C. §§ 3729(a)(1)(A)-(C) by presenting false claims to the United States, making false records, and conspiring to violate the FCA. Id. at ¶ 122-140. Relators also claim that Defendants violated the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, the Stark Law, 42 U.S.C. § 1395nn, and the Louisiana Anti-Kickback Statute, La. R.S. § 37:1745. Id. The United States declined to intervene. (Doc. 53).

II. LEGAL STANDARD

To survive a 12(b)(6) motion to dismiss, the plaintiff must plead facts sufficient to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Additionally, motions to dismiss under Rule 12(b)(6) test the sufficiency of the complaint against the backdrop set forth in Rule 8, which requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Rule 8(a)(2).

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Bluebook (online)
328 F. Supp. 3d 550, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-bruno-v-schaeffer-lamd-2018.