United States Ex Rel. Deering v. Physiotherapy Associates, Inc.

601 F. Supp. 2d 368, 2009 U.S. Dist. LEXIS 20240, 2009 WL 605276
CourtDistrict Court, D. Massachusetts
DecidedMarch 10, 2009
DocketCivil Action 03cv10626-NG
StatusPublished
Cited by3 cases

This text of 601 F. Supp. 2d 368 (United States Ex Rel. Deering v. Physiotherapy Associates, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts 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. Deering v. Physiotherapy Associates, Inc., 601 F. Supp. 2d 368, 2009 U.S. Dist. LEXIS 20240, 2009 WL 605276 (D. Mass. 2009).

Opinion

MEMORANDUM AND ORDER RE: MOTIONS TO DISMISS AND AMEND

NANCY GERTNER, District Judge.

I. INTRODUCTION

Relator Kerry Deering brought suit against his employer and its parent corporation under the False Claims Act, alleging Medicare and Medicaid fraud. Over four years later, but before the case was unsealed, he amended his complaint to add claims for retaliation and defamation. Shortly thereafter, the government and the defendants reached a settlement and voluntarily dismissed the fraud claim. The defendants have moved to dismiss relator’s remaining claims as time-barred, inadequately pled, and without a basis for sub *370 ject matter jurisdiction. The relator has moved to amend his complaint once more, adding allegations to cure any potential pleading defects. Because I find that the remaining allegations are either time-barred or insufficient to state a claim, I GRANT the motion to dismiss (document #43) and DENY the motion to amend (document # 75).

II. FACTS

Kerry Deering and his wife Kim owned and operated a physical therapy practice in Kingman, Arizona (“Kingman Clinic”). In January 2001, they sold their practice to Physiotherapy Associates, Inc. (“PA”), which provides physical, occupational, and speech therapy services at approximately 475 locations in 31 states, including Massachusetts. Upon executing the sale, Deer-ing and his wife both entered into three-year employment contracts with PA, agreeing to continue working at Kingman Clinic for $70,000 per year plus benefits. The employment contracts both included noncompete and nonsolicitation clauses barring the Deerings from offering physical therapy services in Mohave County, Arizona, for two years after separation from PA.

Deering alleges that the new management instructed clinic staff to engage in several illegal billing practices, including billing for at least three services per patient regardless of the services actually rendered. He claims that PA submitted false invoices to Medicare and Medicaid from at least January 2001 to November 2002. Deering states that he protested the billing practices to PA’s national/regional billing manager, Laurie Kozlowski, its regional manager, Stephen Tobler, and Kingman Clinic’s office manager, Lisa Mueller, in 2001 and 2002. He also claims that he advised clinic staff not to follow PA’s billing instructions. According to Deering, PA moderated its overbilling in the fall of 2002, upon learning of a government action concerning another health care provider. Thereafter, PA advised employees to claim two therapy services for every patient seen.

At some point in November 2002, PA conducted an internal investigation of Deering, purportedly for irregularities in Medicare billing. On November 18, 2002, PA fired Deering with one year, one month, and fifteen days remaining on his contract. On February 3, 2003, PA fired Deering’s wife Kim with ten months and twenty-eight days remaining on her contract. Constrained by their noncompete agreements, the Deerings moved to Texas to start a new physical therapy practice. Having been largely unsuccessful, they returned to Kingman to restart their practice after the noncompete period expired. This attempt also failed, and the Deerings had to liquidate many of their assets to support themselves. Deering claims that his business difficulties resulted in no small measure from certain PA employees’ campaign to smear him. He asserts that these defendants told people in the King-man community, including referring physicians, that he was being investigated for, or had been convicted of, healthcare fraud and that he and his wife had divorced as a result.

On April 4, 2003, Deering filed a qui tam action against PA and its parent company Stryker Corporation (“Stryker”) 1 for violation of the False Claims Act (FCA), 31 U.S.C. § 3729 et seq. (document # 1). Pursuant to that Act, the complaint was *371 sealed for sixty days, and the federal government secured several extensions of the seal. In September 2006, the government disclosed the complaint (although it remained sealed) to the defendants, and the parties reached a settlement in principle on December 14, 2006. On July 30, 2007, Deering amended his complaint to add a defamation claim under Arizona Law and a retaliation and discrimination claim under the False Claims Act, 31 U.S.C. § 3730(h) (document # 31). He alleges that PA fired him and his wife because they had complained about illegal billing practices and that PA employees and certain unidentified defendants defamed him to intimidate him and render him a less credible witness.

On July 31, 2007, the government and the defendants entered a stipulation of voluntary partial dismissal (document # 33) following the defendants’ agreement to settle the FCA claim for $16.6 million, and I unsealed the case on September 11, 2007. On March 14, 2008, the defendants moved to dismiss Deering’s remaining retaliation and defamation claims based on the applicable statutes of limitations, inadequate pleading, and lack of supplementary jurisdiction (document # 43). On July 30, 2008, Deering moved to amend his complaint a second time, adding more specific allegations as to both counts (document # 75).

III. DISCUSSION

A. Motions Considered Together

As they turn on the same legal issues, I will address the motion to dismiss and the motion to amend together. Under Fed. R.Civ.P. 15(a), a plaintiff may amend the complaint after being served with a responsive pleading “only with the opposing party’s written consent or the court’s leave.” Courts liberally grant motions to amend “unless the amendment would be futile or reward undue delay.” Adorno v. Crowley Towing & Transp. Co., 443 F.3d 122, 126 (1st Cir.2006). To assess futility, a court applies the motion to dismiss standard under Fed.R.Civ.P. 12(b)(6). Id. Accordingly, the merits of both the motion to dismiss and the motion to amend depend on whether the plaintiffs retaliation and defamation allegations “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 167 L.Ed.2d 929 (2007).

The defendants move to dismiss Deer-ing’s retaliation and defamation claims for untimeliness and inadequate pleading. They further argue that supplementary jurisdiction over the defamation claim is inappropriate under 28 U.S.C. § 1367.

B. Timeliness

Deering’s FCA retaliation claim 2

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Bluebook (online)
601 F. Supp. 2d 368, 2009 U.S. Dist. LEXIS 20240, 2009 WL 605276, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-deering-v-physiotherapy-associates-inc-mad-2009.