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Academy Health Center, Inc. v. Hyperion Foundation, Inc.

United States District Court, S.D. Mississippi, Northern Division

August 7, 2017

ACADEMY HEALTH CENTER, INC. PLAINTIFF
v.
HYPERION FOUNDATION, INC., DEFENDANTS

          ORDER

          CARLTON W. REEVES, UNITED STATES DISTRICT JUDGE

         Before the Court is Defendants' motion for summary judgment. Docket No. 243. The matter has been fully briefed, and the Court is ready to rule.

         As explained in this Court's previous opinion, the war between these parties began nearly a decade ago. See U.S. ex rel. Academy Health Ctr., Inc. v. Hyperion Found., Inc., No. 3:10- CV-552-CWR-LRA, 2014 WL 3385189 (S.D.Miss. July 9, 2014). The instant battle involves the qui tam action initiated by Academy Health Center, Inc. on behalf of the United States Government. Docket No. 1-3. The Government intervened, became an ally of Academy, and took over “that part of the action which alleges that defendants Hyperion Foundation, Inc., AltaCare Corporation, Long Term Care Services, Inc., and Douglas K. Mittleider, made, caused to be made, and/or conspired to make false claims and false statements material to false claims to Medicare and Medicaid, for nursing home services at the Oxford Health & Rehabilitation Center facility in Lumberton, Mississippi.” Docket No. 32, at 2.

         Academy brought many other claims, and the Court dismissed all but one. Academy, 2014 WL 3385189 at *22-41. The remaining cause of action is against Defendants HP/Ancillaries, Inc. (“HPA”), HP/Management Group, Inc. (“HPM”), Sentry Healthcare Acquirors, Inc. (“Sentry”), and Julie Mittleider (collectively “Defendants”) for conspiring to submit fraudulent claims for services purportedly provided at the Oxford Health and Rehabilitation Center (“Oxford Facility”) in violation of the False Claims Act.

         After more than three years of discovery and all of the skirmishes thereto, Defendants have filed their motion for summary judgment on Academy's lone claim. According to Defendants, “the undisputed evidence shows that [they] did not engage in conspiracy to defraud, Medicare, Medicaid or any other third-party payor and there is no genuine dispute as to any material fact regarding this claim.” Docket No. 244, at 2. Therefore, they are entitled to judgment as a matter of law, and the upcoming trial should only involve the claims pursued by the Government.

         The familiar summary judgment standard applies. See Hill v. Hinds County, Miss., No. 3:12-CV-880-CWR-FKB, 2015 WL 1014305, at *2 (S.D.Miss. Mar. 9, 2015).

         I. Law

         A person who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment” to the Federal Government is liable under the FCA. 31 U.S.C. § 3729(a). Specific intent to defraud is not necessary because “knowingly” is defined as acting with (1) actual knowledge, (2) deliberate ignorance, or (3) “reckless disregard of the truth or falsity of the information.” Id. § 3729(b)

         FCA liability also attaches to any person who conspires to violate the statute. Id. § 3729(a). Evidence of a shared “specific intent to defraud the Government” is required in the conspiracy context. U.S. ex rel. Farmer v. City of Houston, 523 F.3d 333, 343 (5th Cir. 2008). To this point, a plaintiff must show “(1) the existence of an unlawful agreement [to violate the FCA] and (2) at least one act performed in furtherance of that agreement.” Id.; U.S. ex rel. Wuestenhoefer v. Jefferson, 105 F.Supp.3d 641, 674 (N.D. Miss. 2015). The first prong is at issue here.

         II. Discussion

         Hyperion Foundation, Inc. (“Hyperion”) is a healthcare company that assumed operation and management of the Oxford Facility. Julie Mittleider, while serving as Hyperion's president, authorized the company's participation in Medicare and Medicaid programs. The participation agreements for both required Julie to certify that she would not submit claims with deliberate ignorance of their truth or falsity.

         But Academy says that Julie's deposition testimony from a related bankruptcy case shows that she and Doug Mittleider (Julie's husband) intended and agreed for her to do the exact opposite:

Q: All right. Can you describe to me your duties as president of Hyperion Foundation, Inc., or, as this document exhibit 2 shows, the CEO and the CFO?
A: The only duty I have had was to sign my name to a paper as president, and I have never -- I don't -- I have never had a meeting, never done anything, never-- I don't know anything even about Hyperion's business. I am ...

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