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Aldridge v. Cain

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

December 14, 2017

JAMES ALDRIDGE, RELATOR, on behalf of UNITED STATES OF AMERICA PLAINTIFF
v.
H. TED CAIN, JULIE CAIN, CORPORATE MANAGEMENT, INC., STONE COUNTY HOSPITAL, INC., STONE COUNTY NURSING AND REHABILITATION CENTER, INC. QUEST MEDICA SERVICES, INC. QUEST REHAB, INC; TERRI BEARD, THOMAS KULUZ, and STARANN LAMIER, AND JOHN DOES I-XX DEFENDANTS

          ORDER [1]

          HENRY T. WINGATE, UNITED STATES DISTRICT JUDGE.

         Before this court are two motions: 1) Defendants' Motion to Unseal the Case [doc. no. 163]; and 2) Motion by the Intervenor, United States, to strike the Answer to the Amended Complaint or for Partial Summary Judgment on Defendants' Affirmative Defenses [Doc. no. 171].

         A third motion, Defendants' Motion to Dismiss the United States' Amended Complaint in Intervention [doc. no. 161] remains pending before this court; the court, however, is persuaded to reserve ruling on that motion until after its ruling on whether to unseal the record in this case. Should the court record be unsealed, Defendants will be allowed an opportunity to review the record and to supplement their motion to dismiss accordingly, should they so choose.

         BACKGROUND

         This is an action brought by the Relator, James Aldridge, under the False Claims Act[2](FCA), 31 U.S.C. §3729(a)(1) and (2). The Defendant Corporate Management Inc. (CMI), owned, managed, and operated hospitals and other health care facilities in South Mississippi, including the other named corporate Defendants (Stone County Hospital, Stone County Nursing & Rehab, Quest Medical Services Inc., and Quest Rehab, Inc.). The Defendant H. Ted Cain is the incorporator, president, treasurer, secretary and director of all of these health care providers. The individual Defendants (Julie Cain, Starr Ann Lamier and Terri Beard) are officers of Stone County Hospital.

         The Relator alleges that Defendants violated the Medicare Anti -Kickback Statutes[3]which prohibit 1) solicitation or receipt of remuneration in return for referrals of Medicare patients and 2) the offer of payment or remuneration to induce such referrals. See e.g., United States ex. rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 889, 903 (5th Cir. 1997). Defendants are also alleged to have violated the Stark Laws, [4] which prohibit physicians from referring Medicare patients to an entity for certain health services, if the referring physician has a “financial relationship” with such entity. 42 U.S.C. §1394nn(a)(1); Id. at 902. The Defendants have submitted claims for payment to Medicaid and Medicare in which they certified that they were in compliance with healthcare laws and regulations; plaintiffs claim they were not in compliance, however, because of violations of the above laws. These false certifications of compliance to collect payment, say plaintiffs, constitute violations of the FCA.

         This court has jurisdiction over this action pursuant to 28 U.S.C. § 1345[5] and 31 U.S.C. §§ 3730(b)[6] and 3732(a)[7]. Venue is also proper in this district in accordance with 31 U.S.C. § 3732(a).

         A hearing on the outstanding motions was conducted by this court on July 17, 2017, during which oral arguments were presented by the government and the Defendants. Attorneys for the United States, for the Relator and for the Defendants were present.

         MOTION TO STRIKE AFFIRMATIVE DEFENSES OR FOR PARTIAL SUMMARY JUDGMENT

         The court first considers the motion of the United States to strike the Defendants' affirmative answers to the Amended Complaint, or for partial summary judgment on the affirmative defenses. This court announced its ruling on this motion from the bench at the conclusion of the July 17, hearing. During the hearing, the Defendants agreed to withdraw the following affirmative defenses:

First Defense: Failure to state a claim upon which relief may be granted.
Second Defense: Failure to exhaust administrative remedies.
Fourth Defense: Failure to state claims with requisite particularity.
Fifteenth Defense: Failure to allege facts or causes of action sufficient to support a claim for attorney's fees, and costs, treble ...

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