The opinion of the court was delivered by: Hon. Robert J. Jonker
This matter is before the Court on Defendants' Joint Motion to Dismiss under FED. R. CIV. P. 9(b) (docket # 41). The Court heard oral argument on the motion on April 29, 2010. The Court has thoroughly reviewed the record and carefully considered the applicable law. The matter is ready for decision.
The United States and Relator Robert Laucirica originally brought this qui tam action on October 7, 2008, in the Southern District of Florida. (Verified Compl., docket # 1.) The United States and Mr. Laucirica stipulated to a transfer of venue to the Western District of Michigan, and an order effecting the transfer issued on December 4, 2008 (docket ## 5, 6). In seeking the transfer, the government and Mr. Laucirica emphasized that the U.S. Attorney's office for the Western District of Michigan was conducting a broader national investigation of possible fraud and abuse in connection with Stryker's financial relationships with orthopedic physicians and healthcare institutions. (docket # 5, at 2.) They suggested that this qui tam action might relate closely to the broader investigation. (Id. at 2-3.) The government eventually elected not to intervene, but reserved the right to intervene at a later point upon a showing of good cause, citing 31 U.S.C. § 3730(c)(3). (docket # 24). The government has been served with the motion to dismiss (docket # 41), but the government has not filed any statement regarding its position, if any, on the motion.*fn1 The government did appear at oral argument and had the opportunity to address the motion.
B. Pleadings and Motion to Dismiss
Mr. Laucirica brings four counts against Defendants, the first three under the False Claims Act, and the fourth for unjust enrichment, based on alleged illegal kickbacks. (Verified Compl., docket # 1.) In their motion to dismiss, Defendants assert that Mr. Laucirica's complaint is deficient under FED. R. CIV. P. 9(b). At oral argument, Defendants argued further that the complaint also fails to satisfy the pleading requirements of FED. R. CIV. P. 8(a)(2). In addition, Defendants assert that Count IV, for unjust enrichment, fails to state a claim upon which relief may be granted. Defendants seek dismissal of the entire complaint with prejudice (docket #41).
The complaint describes Mr. Laucirica's affidavit, attached to the complaint, as "a statement of all material evidence and information related to the Complaint." (Verified Compl., docket # 1, ¶ 2.) Mr. Laucirica is a sales representative for Zimmer Deptula. (Laucirica Aff., ¶ 1.) He has been in the business of selling orthopedic medical devices for over twenty-five years. (Id. at ¶ 2.) In early 2007, he called on Dr. Parvataneni at the University of Miami/Jackson Memorial Hospital. (Id. at ¶ 4.) Dr. Parvataneni was familiar with Zimmer products. (Id.). Dr. Parvataneni agreed to use Zimmer products. (Id. at ¶ 5.) Mr. Laucirica stocked the inventory room at the University of Miami/Jackson Hospital with supplies and products he values at approximately $100,000. (Id.) A few weeks later, Mr. Laucirica checked to determine the use of the Zimmer products he had provided. (Id. at ¶ 6.) Dr. Parvataneni had not used any of the Zimmer products. (Id.) Mr. Laucirica went to Dr. Parvataneni's office for an unscheduled visit and asked him why he had not been using the Zimmer products. (Id.) Dr. Parvataneni told Mr. Laucirica that he had gone to dinner with Stryker representatives, and that Stryker had agreed to fund the training of his residents and certain of his research projects. (Id.) Mr. Laucirica asked Dr. Parvataneni about the substance of his research projects, and the doctor was not forthcoming with details. (Id. at ¶ 7.) Mr. Laucirica adds that: upon information and belief Dr. Parvataneni's explanations indicated to me that he was receiving funding from Stryker Corporation and that in exchange for that funding Stryker Corporation had made no specifics [sic] demands for nor provided any method for measurement of any research or resident teaching. Further, upon information and belief Dr. Parvataneni's explanation to me indicated that he was receiving funding from Stryker Corporation primarily on the condition that he preferentially would use Stryker medical implant products and that Stryker Corporation in fact knew that Dr. Parvataneni had not been asked to document production of a specified amount of research or a given volume or quality of resident teaching.
Mr. Laucirica told Dr. Parvataneni that Mr. Laucirica understood that it would be illegal for any implant company to provide funding for research or resident education in exchange for preferential use of the company's implants for Medicare patients. (Id. at ¶ 8.) Dr. Parvataneni told Mr. Laucirica that should Zimmer decide to fund his research projects, he would be willing to discuss further conditions for his use of Zimmer products. (Id.)
On the basis of Mr. Laucirica's experience with Dr. Parvataneni, the complaint alleges a kickback scheme under which Dr. Parvataneni agreed to use Stryker's medical devices for implantation into Medicare patients in exchange for Stryker's agreement to fund the training of Dr. Parvataneni's residents and various research projects. (Id. at ¶ 29.) The complaint notes that to participate in the Medicare program, Dr. Parvataneni "and/or [his] affiliated medical providers and hospitals" must complete a supplier/provider application for the government.*fn2 (Id. at ¶ 26.) The complaint states that the application requires Dr. Parvataneni "and/or [his] affiliated medical providers and hospitals [to] certify that they will comply with all laws, regulations, and guidance concerning proper practices for Medicare participants." (Id.) Mr. Laucirica's theory appears to be that Dr. Parvataneni and Stryker engaged in an illegal kickback scheme, and that any certifications they made concerning compliance with all applicable laws were therefore false, which rendered any requests for reimbursement from Medicare violations of the False Claims Act. The complaint does not actually allege that Defendants submitted a false claim; only that they must have done so.
Under the False Claims Act, a person who "knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government," is civilly liable. 31 U.S.C. § 3729(a)(2). The Sixth Circuit has summarized the elements of a claim under the False Claims Act:
First, the defendant must have made a false statement or created a false record, and must have done so with 'actual knowledge,' 'deliberate ignorance,' or 'reckless disregard of the truth or falsity of the information'. . . . Second, the defendant must have submitted a claim for payment to the federal government. . . . Third, the defendant's false statement must have been made with the purpose of getting a false or fraudulent claim paid or approved by the Government. . . . Finally, the defendant's false statement or record must have been material to the government's decision to make the payment sought in the defendant's claim.
United States ex rel., SNAPP, Inc. v. Ford Motor Co., 532 F.3d 496, 504-05 (6th Cir. 2008) (quotations and citations omitted). Defendants claim Plaintiff has failed to state a viable claim, and move to dismiss under FED. R. CIV. P. 9(b), which provides that "[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other person's mind may be alleged generally." Defendants argue further that the complaint also fails to satisfy FED. R. CIV. P. 8(a)(2), which requires a pleading stating a claim for relief to contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Under Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), the "short and plain statement" must include enough to "raise a right to relief above the speculative level." Defendants also move to dismiss Plaintiff's unjust enrichment claim (Count IV) for failure to state a claim upon which relief may be granted.
C. False Claims Act (Counts ...