HLD, v. 32, n. 5 (May 2004)
U.S. Court In Alabama Holds Qui Tam Plaintiff Failed To Adequately
Allege Fraud Claims
Paul Shorrosh was hired by UnitedHealthcare, Inc. (United) to perform
audits of hospitals that provided services to United members. Shorrosh claimed
he found evidence that United had failed to make full payment to hospitals that
provided services to United members who were part of a subsidiary's Medicare+Choice
(M+C) plan. Shorrosh brought a qui tam action under the False Claims Act (FCA)
against United for its alleged failure to pay the sums due to the hospitals.
Specifically, Shorrosh claimed that under the M+C plan United received retroactive
adjustment payments from the Centers for Medicare and Medicaid Services (CMS)
and failed to pass along a portion of the adjustments to the hospitals. The
government declined to intervene in the case. United moved to dismiss.
The U.S. District Court for the Southern District of Alabama granted
the motion because Shorrosh failed to provide any evidence that United had submitted
false claims to the government, only that United shortchanged the hospitals.
The court found that neither the Medicare regulations nor manuals set forth
any specific format for retroactive adjustment submissions by plans and did
not specify how plans should apply payments resulting from retroactive additions.
Therefore, "without a falsified request that the Government pay out sums it
does not owe, there is no False Claims Act violation," said the court in concluding
that the complaint had to be dismissed for failing to state a claim. Instead,
found the court, the facts alleged indicate that the hospitals may have a claim
against United for breach of contract.
Shorrosh also argued that Medicare requirements and not the M+C
contract governed the plan's payment obligation to a provider, and that United
violated the "prompt payment" requirement. The court determined that Medicare's
obligations to pay an M+C plan have no bearing on the M+C plan's payments to
providers, and thus Shorrosh failed to allege a FCA violation. The court noted
that any failure by an M+C plan to timely pay a provider would entitle the provider
to pursue remedies on the basis of a breach of contract claim.
The court also determined that the complaint failed to satisfy
the pleading requirements of Fed. R.
Civ. P. 9(b) that a claim for fraud must be stated with particularity.
Shorrosh failed to identify any specific claim that was presented to the government,
and failed to provide any dates when the alleged false claims were submitted.
Finding that Shorrosh merely made generalized statements about unspecified submissions
by United and failed to allege any specific false claims, the court granted
United's motion to dismiss.
United States ex rel. Shorrosh v. UnitedHealthcare, Inc.,
No. 02-513-BH-L (S.D. Ala. Feb. 27, 2004).