Archbold Filed First Amended Complaint

Transcription

Case 1:08-cv-03325-RLV Document 4
Filed 11/13/08 Page 1 of 57
IN THE UNITED STATES DISTRICT COURT FILED IN CLERK'S OFFICE
FOR THE NORTHERN DISTRICT OF GEORGIA t,,, [C . A,1 i ,imm
ATLANTA DIVISION
NOV 132008
JAM
By:
THE UNITED STATES OF AMERICA
AND
THE STATE OF GEORGIA,
ex. rel.,
~ EN,
Deputy Clerk
}
Civil Action No . : 1 :08-CV-3325
WESLEY SIMMS, M .D .
}
TO BE FILED IN CAMERA
UNDER SEAL
Relator/Quitarn Plaintiff,
}
JOHN D . ARCHBOLD
MEMORIAL HOSPITAL , INC .,
HOSPITAL AUTHORITY OF THE
CITY OF THOMASVILLE ,
JOHN DOES 1 THROUGH 10 ,
}
}
Defendants .
FIRST AMENDED COMPLAINT
UNDER THE FEDERAL AND STATE FALSE CLAIMS ACTS
Relator Wesley Simms, M .D ., by and through his counsel of record,
states his First Amended Complaint on behalf of the United States of
America and the State of Georgia against Defendants John D . Archbold
Memorial Hospital, Inc . ("Archbold"), Hospital Authority of the City of
Thomasville (sometimes referred to as "the Hospital Authority"), and John
1
Clerk
Does 1 through 10 (sometimes all Defendants are collectively referred to as
"the Archbold Defendants") as follows :
INTRODUCTION
1 . The Arc hbold Defendants have submitted false ce rtificat i ons and
false information to the Georgia Department of Co mmunity Health
in a fraudulent scheme to obtain federal matching payments under
the federal-state Medicaid program.
2 . The Archbold Defendants' scheme revolved around falsely
representing that it was owned and operated by a city hospital
authority. Under the guise of that misrepresentation, Archbold
ma nipulated supposed "intergovernmental transfe rs" (I GTs) to
illegally obtain increased federal matching payments .
3. State and l ocal governments use IGTs to ca rry out thei r sha r ed
governmental functio ns, such
as collecting and re distributing
revenues to provide essential government services . Archbold
repeatedly falsely represented that it was owned and operated by a
city hospital authority in a scheme to exploit illegally
intergovernmental transfers and obtain higher federal matching
payments under the federal-state Medicaid program discussed
below.
2
4 . The Archbold Defendants' fraudulent scheme resulted in Archbold
receiving in excess of 20 million dollars in federal matching
overpayments .
5 . Archbold's management and leaders knowingly acted or conspired
to fraudul ently and illegally exploit a loophole in the federal-state
Medicaid program .
6 . This is an action to recover damages and civil penalties on behalf of
the United States of America and the State of Georgia arising out of
the false claims prese nted for payment by Defendants under the
Federal-State Medicaid Program . This action arises under the
provisions of Title 31 U .S .C . § 3729, et seq, popularly known as the
False Claims Act which provides that the United States District
Courts shall have exclusive jurisdiction of actions brought under that
Act. This action also arises under the State of Georgia False Claims
Act, O .C.G.A. Section 49-4-168 et. seq . This Court may exercise
jurisdiction over such pendent state law claims .
7 . Section 3732(a) of the Federal False Claims Act provides, "Any
action under section 3730 may be brought in any judicial district in
which the defendant or, in the case of multiple defendants, any one
defendant can be found, resides, transacts business, or in which any
3
act proscribed by section 3729 occurred ."
8 . John D . Archbold Memorial Hospital, Inc . is a "non-profit" private
hospital organized as a tax-exempt "charitable" 501(c)(3)
organization under federal tax law . Archbold is located in
Thomasville, Georgia . On it website, Archbold reports, "Archbold
Medical Center is a five-hospital, four nursing-home system with
more than 800 beds . I t e mploys more th an 2,500 people and boas ts
an outstanding medical staff of more than 200 qualified specialists .
Our flagship h ospital is John D. Arc hbol d Memorial Hospital in
Thomasville, Georgia, with 240 beds . Our affiliate hospitals, also in
Georgia, are Brooks County Hospital in Quitman, Early Memorial
Hospital in Blakely, Grady General Hospital in Cairo, and Mitchell
County Hospital in Camilla ."
9. Defendant Hospital Authority of the City of Thomasville is a selfdescribed "public body politic and corporate ."
1 0. The H ospital Autho rit y was n ever legit i matel y ope rated as an
instrumentality of the State of Georgia and was not legitimately
operated as public body politic . The Hospital Authority did not
comply with the Geo r gia Hospital Authorities A ct. The Hospital
Authorit y was created, controlled, and orch estra ted by Archbold, a
private entity, for the sole purpose of issuing tax-exempt
construction bonds as directed by the private entity .
11 . The Hospital Authority did not exercise or perform any public and
essential government functions . The Hospital Authority never
operated any hospital, including Archbold .
12. The Hospital Authority is not entitled to state action immunity
under the False Claims Act .
13.The Archbold D efendants' action s at issue occurred in p a rt i n this
District where the Archbold D efendants submitte d false documents
and made false representations to the Georgia Department of
Community Health in Atlanta and where the Archbold Defendants
submitted fraudulent claims for excess payments based on such false
documents and false representations .
14.An action for violation of the federal False Claims Act may be
brought b y the Attorney . Ge neral under 31 U.S.C. § 3730(a) or by
private persons under the qui tam provisions of 31 U .S .C. § 3730(b) .
15.The Court has subject matter jurisdiction to entertain this action
under 28 U .S .C. § § 1331 and 1345 . The Court may exercise
personal jurisdiction over Archbold under 3 1 U.S .C. §3732(a)
5
because Archbold's acts prohibited by Section 3729 occurred in the
Northern District of Georgia .
16 .Venue is proper in the Northern District of Georgia under 31 U .S .C .
§3732 and 28 U .S.C. § 1391(b) and (c) because the Archbold
Defendants comm itted prohibited acts in this District.
17.Relator Dr . Simms is the original source of the information,
investigation, and analysis upon which this First Amended
Complaint is based.
18 .Dr. Simms has previously served a copy of the Complaint and
"written disclosure of substantially all material evidence and
information the person possesses" upon the United States Attorney
for the Northern District of Georgia and the United States Attorney
Gene ral . Dr. Simms has also served a copy of th e Complaint and
"written disclosure of substantially all material evidence and
information the person possesses" upon the Georgia Attorney
General .
INTRODUCTION TO DR . 5IMMS' INVESTIGATION
RESEARCH AND ACTIONS TO EXPOSE THE ARCHBOLD
DEFENDANTS' FRAUD TO OBTAIN FEDERAL MATCHING
DOLLARS
6
1 9 . Dr . Simms joined Pathology Associates, PC, on August 1, 1994 in
Thomasville, Georgia . He was an employee for three years and, then
became a shareholder/director on August 1, 1997 .
20.Pathology Associates had a contract with the Archbold to run their
labs, fo r which it was paid approxi mate l y $500,000.00 ann ually .
This contract expired Dec. 31, 1 996 . This a rrangem en t continued
essentially unchanged until late summer 2005 as a "hand shake"
arrangement.
21 . Dr. Simms serve d as Chief of Staff at Archbold M emorial Hospital
from March 1 , 2004 - February 28, 2005 . He was also a member of
Archbold 's Board of Directors during this time. As a physician o n
the medical staff since 1994 and as Chief of Staff and Board
member at Archbold in 2004-2005, Dr . Simms was extensively
involved in decisions concerning the management and operations of
the hospital .
22 .Dr. Simms' investigation of the Archbold Defendants' false
representations that the hospital was owned and operated by a city
hospital authority began in April 2007 . From his experience working
on staff as a physician at the hospital and from his former position as
Chief of Staff at Archbold and a member of the Board of Directors,
he knew that the hospital was not owned and operated by a county or
city h os pital authority.
23 .In the summer of 2007, Dr . Simms began an investigation in which
he attempted to expose what he believed was a sham arrangement
engineered by the Archbold Defendants to obtain more payments as
a supposed government-owned or operated hospital when in reality
it was not . At that time, Dr . Simms had direct and independent
knowledge that Archbold was not owned and operated by a city or
county hospital authority . That knowledge motivated Dr . Simms to
spend many hours and in excess of $60,0 00 of his own money to
retain a lawyer and an ex-FBI agent in an effort to expose the sham .
24.On August 6, 2007, Dr . Simms personally attempted to hand-deliver a
request for records under the Georgia Open Records Act ( "GORA")
at th e ad ministrative offices i n John D . Archbold Memoria l
Hospital . Dr. Simms attempted this delivery because the address of
the "contact" person for the Hospital Authority is listed on the
website for the 2007 Directory of Registered Local Government
Authorities as John D . Archbold Memorial Hospital .
25.Dr. Simms' requ est for records included among oth er documents all
minutes of meetings of the Hospital Authority, "all lease or
management contracts with, relating to, or for the benefit of, or
concerning John D. Archbold Memorial Hospital," receipts, deeds,
and contracts for the sale or purchase of real property concerning
Archbold, all contracts with any political subdivisions of the state or a
county, and all contracts with or for the benefit of Archbold Memorial
Hospital.
26. At Archbold's administrative offices, Dr. Simms was told that mail
could not be accepted on behalf of the Hospital Authority .
27. During this visit, Dr . Simms personally attempted to deliver the
GORA request to Mr. Earl Williams, in his apparent capacity as
Chairman of the Hospital Authority of the City of Thomasville . Mr.
Earl Williams is listed as a member of the Hospital Authority on the
website for the 2007 Directory of Registered Local Government
Authorities .
28. In response to the August 6 GORA request, counsel for the City
of Thomasville verbally reported that Mr . Earl Williams was no
longer a member of the Hospital Authority.
29 .On August 30, 2007, Dr. Simms personally hand-delivered an Open
Records Act request (the "August 30 GORA request") to the office
of J . William Sellers, Jr ., Archbold's Chief Financial Officer .
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Filed 11/13/08 Page 10 of 57
30. Dr. S imms d e livere d his G ORA r equest to Mr. Se llers b ecause he
was listed as the contact for the Hospital Authority on the website
for the 2007 Directory of Registered Local Government Authorities .
31 . Additionally, Dr . Simms' August 30 GORA request was
addressed and delivered to Mr . Sellers at Archbold Memorial
Hospital because counse l for the City of Thomasville reported that
the Hospital Authority's "public" records were located at Archbold .
32. Some records requested in Dr . Simms' August 6 GORA request
were produced on August 27, 2007 in the offices of counsel for the
City of Thomasville.
Dr.
Simms personally inspected th ose
documents together with a retired FBI agent (who is also a forensic
accountant) who recorded which documents were produced and
which requested documents were not produced . Dr. Simms hired and
paid this retired FBI agent/forensic accountant because Dr . Simms
beli eved tha t the reco rds of the Hospital Autho rity would be forged
or not pr od uced and Dr. S i mm s wanted to have an independent
third-party inspect the records actually produced .
33 . When the Hospital Authority responded to the earlier August 6 GORA
request, it did nott produce many of the records requested by Dr .
Simms .
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Filed 11/13/08 Page 11 of 57
34 .As a result of many records not being produced in response to Dr .
Simms' earlier request and because Dr . Simms was advised that Mr .
Earl Williams was no longer a member of the Hospital Authority, on
August 30, 2007, Dr. Si mms issued a second request fo r documents
under the Georgia Open Records Act . His requests included the
following documents :
•
The minutes of all meetings, or consents in lieu of a
meeting, of the Authority in 2007 disclosing, discussing or
concerning when Earl Williams was no longer a member of
the Authority;
•
All th e minu tes of meetings o r h eari ngs, o r consents in
lieu of meeti ngs, notices of meetings or hearings, and
resolutions of the authority and any committee of the aut hority,
including any public hearings, s ince January 1, 1 98 1 ;
All lease or management contracts with, relating to, for the
benefit of, or concerning John D . Archbold Memorial
Hospital;
•
All receipts, deeds, bills of sale, contracts and other written
agreements for the sale or purchase of real or personal
property relatingg to, for the benefit of, or concerning John D .
Archbold Memorial Hospital.
•
All contracts with any political subdivisions of the state or a
county;
•
All contracts with or for the benefit of Archbold Memorial
Hospital .
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35 . Dr . Simms requested these records and others because he believed
that the Hospital Authority was a sham with respect to the ownership
and operations of Arc bold .
36 .The Hospital Authority failed to respond to Dr . Simms' August 30
GORA request within three business days as required by O .C .G.A. §
50-18-70(f) . The Hospital Authority "must respond to an Open
Records Act request within three business days after the agency
receives the request is necessary to prevent governmental abuse and
to uphold the purposes of the Act ." Athens Newspapers, LLC v .
Unified Government of Athens-Clarke County, 284 Ga . App . 465
(2007).
37 .In an effort to resolve the Hospital Authority's failure to respond and
produce records, Dr . Simms retained legal counsel to send a letter on
September 12, 2007 to counsel for both the Hospital Authority and
Archbold .
38.On September 14, 2007, Archbold's counsel stated that the Hospital
Authority's res ponse " to Dr. Simms' request, which was addresse d to
B ill Sellers" was sent to Dr. Simms b y counsel for the City of
Thomasville .
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39. The response to which Archbold's counsel was referring stated : " I
am informed that all documents falling within the scope of your
request of August 6, 2007, which exist and which are in Mr .
Sellers' possession were made available to you and your counsel on
August 27 ."
40. According to the Hospital Authority's counsel, Mr . Sellers was "the
individual most likely to have custody of the Authority's documents"
and "who as a practical matter serves as the custodian of records of
the Authority ."
41 . On October 12, 2007, Dr . Simms personally hand-delivered
another Open Records Act request to Archbold and Archbold's
Chief Financial Officer, Mr . Sellers, seeking certain records of the
Hospital Authority concerning the ownership, management and
operations of Archbold.
42. Dr. Simms sent his GORA Requests because the Hospital
Authorit y, in res p onse to ea rlier requ ests unde r G eorgia's Open
Records Act, did not produce requested records that any public
hospital authority in Georgia s hould readily have avai lable .
43 .In response to Dr. Simms' October 12, 2007 GORA requests,
Archbold's counsel wrote :
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I write in response to your letter of October 1.2, 2007, to
John D . Archbold Memor ial Hospital, Inc . {"Archbold"},
regarding "Georgia Open Records Act - Hospital Authority of
the City of Thomasville ." Archbold is not a covered entity
under the Georgia Open Records Act, and therefore it is not
obligated to respond to open records requests .
44. In response to Dr. Simms' G ORA r equests, Mr. Sel lers wrote:
I write in response to your letter of October 12, 2007, to
me, regarding "Georgia Open Records Act - Hospital Authority
of the City of Thomasville ." I am not a covered entity under the
Georgia Open Records Act, and therefore I am not obligated to
respond to open records requests, except to the extent that I
effectively serve as the custodian of records for the Hospital
Authority for the City of Thomasville .
45 . Despite the run-around tactics and obstacles created by Mr . Sellers
and Archbold, Dr. Simms persisted in his investigation and efforts to
expose the fraud .
46. In September and October of 2007, Dr . Simms` attorney, Tony
Coch ran, a lso had numerous co mmunications with the Geo rgia
Attorney General 's Office concerni ng Dr. S imms' effo rts to ex pose
what he believed was a fraudulent sham .
47 . Dr. Simms persisted in his investigati on and di rected his counsel to
depose Mr. Sellers, as t h e des ignated represe ntative of t he Hospital
Authority . That deposition was scheduled for November 16, 2007 .
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48. On November 12, 2007, Archbold's counsel canceled the deposition
of Mr. Sellers .
49. Dr. Simms persisted in his investigation despite the obstacles
created by Archbold . One day after Mr. Sellers' deposition was
cancelled, on November 13, 2007, Dr . Simms filed a second
Complaint which named Archbold and Mr . Sellers as defendants .
Dr. Simms filed his Complaint in the Superior Court of Thomas
County un der th e Geo rgi a Open Records Act.
50. Two days later and one day before the originally scheduled
deposition of Mr. Sellers, on November 15, Archbold's counsel met
w ith Mr. Doug Colburn, Inspector General of the Geo rgia
Department of Community Health . In this meeting and in a
subsequent letter, Archbold's counsel advised Mr . Coiburn that
"certain purported reports of meetings of the Hospital Authority of
the City of Thomasville were prepared by J. William Sellers, Chief
Financial Officer of Archbold Medical Center ." The letter from
Archbold's counsel to Mr . Colburn stated in pertinent part, "These
reports, copies of which were provided to you when we met, are not
accurate because, as we currently understand it, the meetings
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reflected in these documents did not occur in one instance or in one
instance did not occur as reported ."
51 .Dr.
Simms' inves tigation, persis tence, and determ ination in
exposing the sham directly caused and led to Archbold's
acknowledgment to the Department of Community Health Inspector
General that certain meeting minutes of the Hospital Authority were
forged .
52. Dr. Si mms co ntinued in his effo rts to require Archbold to produce
documents and in his efforts to expose what he believed was a sham .
53. Dr. Simms directed and paid his counsel to depose Mr . Sellers. On
January 3, 2008, Mr . Sellers was deposed and he pled the Fifth
Amendment to nu merous questions abo ut the relations hip between
the Hospital Authority and Archbold Memorial Hospital .
54. Dr . Simms' efforts directly caused and led to Archbold's co unsel
m eeting w ith the Department of Co mmunity Health Medicaid
Director of Legal Services on February 13, 2008 . In this meeting
Archbold's counsel revealed that Mr . Sellers had previously
submitted false "Attestations of Public Status" o n behalf of
Archbold . Such attestations represented that Archbold was owned
and operated by the Hospital Authority . These attestations were
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false . Dr . Simms' extensive efforts, persistence, and substantial
commitment of his time and money led to Archbold acknowledging
the false attestations .
55 . Although Archbold's counsel focused on Mr . Sellers' conduct, in
reality, Mr. Sellers did not act alone . Rather he acted in conspiracy
with other individuals at Archbold and the Hospital Authority in
pursuit of a sophisticated scheme to illegally obtain excessive
federal matching funds under the federal-state Medicaid program .
The financial incentives behind that scheme are discussed in detail
below.
56 .As discussed below, the Archbold Defendants' scheme was neither
an accident nor innocent mistake . The Archbold Defendants' scheme
was not the result of a rogue chief financial officer . Rather, the
Archbold Defendants' management and leaders knowingly acted or
conspired to fraudulently exploit a loophole in the federal-state
Medicaid program discussed below .
57 . The Archbold Defendants repeatedly submitted false attestations
that Archbold was owned and operated by a city hospital authority in
a scheme to increase federal matching payments under the federalstate Medicaid program .
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SS.In submissions to the Georgia Department of Community Health,
the Archbold Defendants repeatedly represented that it was owned
and operated by a city hospital authority . Such representations were
false and Archbold knowingly made such misrepresentations with
the intent to illegally obtain federal matching payments under the
federal-state Medicaid program .
59. For example, in June of 2004, the Archbold Defendants submitted
an Attestation of Public Status to the Georgia Department of
Community Health in which it falsely certified that the Hospital
Authority of City of Thomasville "is the owner of the owner of John
D. Archbold Memorial Hospital ." Such representation was false .
The Hospital Authority of City of Thomasville has issued bonds for
construction projects at Archbold Memorial Hospital . The Hospital
Authority has held security interests in Archbold as a part of such
construction financing . However, the Hospital Authority of City of
Thomasvill e did not own or operate Archbold.
60. In the Attestation of Public Status, the Archbold Defendants further
certified that the "authority retains ownership and ultimate authority
for the operations of the hospital ." Such representation was also
false. The Hospital Authority City of Thomasville did not control the
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operations of the hospital and did not retain any authority over the
operations of the hospital.
6 1 .In the Intergovernmental T ran sfer Questionnaire submitted to the
Georgia Department of Community Health, Archbold again
represented that "Hosp . Auth. of City of Thomasville" owns title to
the healthcare facility . Such representation was false .
62.Archbold also represented on the Questionnaire that at the "Annual
Hospital Authority meeting," representatives of the hospital meet
wi th representatives of the government entity which ow n s the
facility for the purpose of sharing information and ideas regarding
operation of the leased facility . Such representation was also false .
63. Due to the false attestations and certifications that Archbold was
owned and operated by a city hospital authority, Archbold has
illegally obtained upper payment limit overpayments from the
federal-state Medicaid program in the amount of at least
$10,836,499 .00 for fiscal years 2003 through 2007 . Archbold's
Glenn-Mor Nursing Home also illegally obtained upper payment
limits from the federal-state Medicaid program in the amount of
$2,396,136 . Ar chbold does not even own Glenn Mo r nursing home;
it leases the facility from a private family. The Hospital Authority ,
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has nothing to do with the operation or management of Glenn Mor
nursing home .
64 . In December of 2002, the Archbold Defendants orchestrated a
transfer of funds pu rporte dly from the Hospital Authority of the City
of Thomasville in the amount of $2,059,678 .00 to the Georgia
Department of Community Health Indigent Care Trust Fund .
Archbold announced such transfer with a cover letter dated
December 2, 2002 purportedly from the Hospital Authority which
stated, "It is our understanding that contributions and transfe r s to the
Trust Fund, as they have in the past, will be matched by ava ilable
federal funds .. . " (emphas is added). The federal matching funds
were the target of the Archbold Defendants' scheme .
65 . In December of 2003, the Archbold Defendants orchestrated a
similar transfer of funds purportedly from the Hospital Authority of
the City of Thomasville in the amount of $2,412,912.00 to the
Georgia Department - of Community Health Indigent Care Trust
Fund . Archbold announced such transfer with a cover letter dated
stated, "It is o ur understanding that contr ibutions and transfers to the
Trust Fund, as t hey have i n the past, w ill be matched by available
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federal fund s . .. " (emphasis added) . The federal matching funds
were again the target of the Archbold Defendants' scheme .
bb.In June of 2004, the Archbold Defendants orchestrated a similar
transfer of funds purportedly from the Hospital Authority of the City
of Thomasville in the amount of $2,564,757 .00 to the Georgia
Department of Community Health Indigent Care Trust Fund .
Archbold announced such transfer with a cover letter dated June 17,
2004 purportedly from the Hospital Authority which stated, "It is
our understanding that contributions and transfers to the Trust Fund,
as they have in the past, will be matched by available federal
funds .. . " (emphasis added) . The federal matching funds were again
the target of the Archbold Defendants' scheme .
67. In December of 2004, the Archbold Defendants again orchestrated
a similar transfer of funds purportedly from the Hospital Authority
of the City of Thomasville in the amount of $2,354,977 .00 to the
Georgia Department of Community Health Indigent Care Trust
Fund. Archbold announced such transfer with a cover letter dated
stated, "fit is o ur un de rsta nding that co ntribution s and transfers to the
Trust Fund, as they have in the past, will be matched by avai l able
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federal funds . . . " (emphasis added) . The federal matching funds
were again the target of the Archbold Defendants' scheme .
68 . In June of 2005, the Archbold Defendants again orchestrated a
similar transfer of funds purportedly from the Hospital Authority of
the City of Thomasville in the amount of $310,953 .00 to the Georgia
Department of Community Health Indigent Care Trust Fund . Such
transfer was announced with a cover letter dated June 21, 2005
purportedly from the Hospital Authority which stated, "It is our
understanding that contributions and transfers to the Trust Fund, as
they have in the past, will be matc hed by available federal
funds . . . " (emphasis added). The federal matching funds were again
69. In March of 2007, the Archbold Defendants orchestrated a similar
transfe r of fu nds from the Hospital Authority of the City of
Thomasville in the am ount of $681,769 .00 to the
Georgia
transfer was announced with a Notice of intent to Transfer issued by
Archbold Medical Center . The federal matching funds were again
the ta rget of t he Arc hbold Defendants' sch eme.
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70.In June of 2007, the Archbold Defendants orchestrated a similar
transfer of funds purportedly from the Hospital Authority of the City
of Thomasville in the amount of $451,453 .00 to the Georgia
transfer was announced with a Notice of Intent to Transfer issued by
Archbold Medical Center . The federal matching funds were again
7 1 . Archbold received federal matching funds in response to each of
these purported inter-governmental transfers presented by the
Archbold Defendants to the Georgia Department of Community
Health .
72. The Archbold Defendants used this financing scheme involving
inter-governmental transfers to create the illusion of a valid state
Medicaid expenditure to a health care provider .
73 . The Archbold Defendants' scheme was a premeditated sophisticated
scheme to obtain federal matching payments . With respect to each of the
transfers identified above, Archbold orchestrated the transfer of its own
moneys to the Department of Community Health and such funds
essentially made a round-trip from Archbold's bank account to the
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Department of Community Health and then back to Archbold with
federal matching dollars .
74.As a result of such round-trip arrangement or "structured transactions"
and false representations that Archbold was owned and operated by a
city hospital authority, Archbold illegally obtained federal matching
funds to which it was not entitled .
75. Through illegal intergovernmental transfers under which the
Archbold Defendants misrepresented that Archbold was owned and
operated by a city hospital authority, Archbold also illegally
obtained federal DSH payments under the Georgia Indigent Care
Trust Fund. According to records of the Georgia Department of
Community Health, such intergovernmental transfers resulted in net
payments to Archbold in the amount of approximately
$9,361,664 .00 for the fiscal years 2003 through 2008 . According to
records from the Department of Community Health, the gross DSH
payments to Archbold were $4,119,355 .00 in Fiscal Year 2003,
$4,825,824 .00 in 2004, $4,154,372 .00 in 2005, $3,585,425 .00 in
2006, $2,979,810 .00 in 2007, and $ 1 ,882,333 .00 in 2 008 .
76.Because of the Archbold Defendants' false certifications and
fraudulent abuse of the "intergovernmental transfer" loophole
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discussed below, Archbold has illegally obtained in excess of 20
million dollars in federal matching overpayments .
77. The Archbold Defendants conspired to intentionally violate federal
and state law with the purpose of obtaining federal moneys intended
to provide matching dollars for local government units which
legitimately own and operate a hospital . - Archbold does not qualify
for such intergovernmental transfers because it is not owned by a
governmentt entity and is not operated by a government entity . Dr .
Simm's investigation, research, and persistence led to the exposure
of the Archbold Defendants' fraud on the federal-state Medicaid
program .
78 .On August 29, 2008, Mr. Sellers was indicted in the United States
District Court for the Middle District of Georgia, Case No . 7 :08-CR27-WLS . Counts One through Three are for falsification of records
in violation of 18 U.S .C. 1519 and Count Four is for obstruction of
justice in attempting to corruptly conceal documents in violation of
18 U .S.C. 1512 (c) (1) .
79. Mr. Sellers and other top executives at Archbold are highly
compensated . In fiscal year 2005, the organization reported
$1,086,634 in salary and benefits for Mr . Sellers, and $1,445,382 for
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the fo rmer CEO Ken Bever ly. Based upon information and belief,
their compensation in part is based upon the financial performance
of Archbold . The millions of dollars in fraudulent overpayments at
least partially assured that these executives would maintain and
increase their compensation by falsely boosting the financial
performance of Archbold .
INTRODUCTION TO THE FEDERAL AND STATE FALSE
CLAIMS ACTS
80 .The False Clams Act ("FCA") provides in pertinent part :
i. Any person who (1) knowingly presents or causes
to be presented, to an officer or employee of the
United States Government or a member of the
Armed Force of the United States a false or
fraudulent claim for payment or approval ; (2)
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 ; (3) conspires to defraud the
Government by getting a false or fraudulent claim
paid or approved by the Government ; . . or (7)
knowingly makes, uses, or caused to be made or
used a false record or statement to conceal, avoid,
or decrease an obligation to pay or transmit
money or property to the Government, is liable to
the United States Government for a civil penalty
of not less than $5,500 and not more than
$11,000, plus 3 times the amount of damages
which the Government sustains because of the act
of that person . . .(b) For purposes of this section,
the terms "knowing" and "knowingly" mean that a
person, with respect to information (1) has actual
26
Filed 11/13/08 Page 27 of 57
knowledge of the information; (2) acts in
deliberate ignorance of t he truth o r falsity of the
inform ation; or (3) acts i n reckl ess d isregard of
the truth or falsity of the informati o n , an d n o
proof of specific intent to defraud is required.
31 U.S .C . - § 3729 .
81 . The State False Claims Act contains similar provisions in
O.C.G.A. Section 49-4-168 .1 which became effective May 24, 2007 .
With respect to each of the provisions established in the federal
False Claims Act discussed in this First Amended Complaint, the
State False Claims provides similar provisions . See O.C.G .A.
Section 49-4-168 et. seq.
82. The federal False Claims Act has a liberal scienter requirement .
"No proof of specific intent to defraud is required" to state a claim
under the FCA. 31 U .S .C. § 3927(b) . Additionally, under Rule 9(b),
"[m]alice, intent, knowledge, and other condition of mind of a person
may be averred generally ." Rule 9(b), Fed . R. Civ. P .
83. A plaintiff is not required to plead fraud in a False Claims Act
action, rather, only that the conduct by the defendants was done
knowingly as d efined unde r the Act. Liability under the Civil False
Claims Act is statutory--that is liability arises from performance of
one of the acts set forth in 31 U .S .C. § 3729(a) . This statutory liability
27
Filed 11/13/08 Page 28 of 57
underscores that the False Claims Act is not a fraud statute ; instead it
is a fa lse claim/false statement statute.
84.The FCA establishes liability,
inter alia,
for anyone who
"knowingly presents, or causes to be presented, to an officer or
employee of the United States Government . . . a false or fraudulent
claim for payment or approval," 31 U .S .C. § 3729(a)(1), or
"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," 31 U .S.C . § 3729(a)(2), or "knowingly makes, uses,
or causes to be made or used, a false record or statement to conceal,
avoid, or decrease an obligation to pay or transmit money or property
to the Government ." 31 U .S .C . § 3729(a)(7) (emphasis added) ; see
also O.C.G.A. Section 49-4-168 .
85 .The FCA defines "knowing" and "knowingly" as having actual
knowledge of the information, or acting in either deliberate
ignorance of or in reckless disregard of the information's truth or
falsity . 31 U .S .C. § 3729 (b).
86 .Protection of the public treasury requires that those who seek public
funds act with scrupulous regard for the requirements of law.
Participants in the Medicaid program have a duty to familiarize
28
Filed 11/13/08 Page 29 of 57
themselves with the legal requirements for payment and ensure
compliance . A defendant who fails to inform himself of those
requirements acts in reckless disregard or in deliberate ignorance of
those requirements, either of which was sufficient to charge him with
knowledge of the falsity of the claims in question . Likewise, a
defendant who fails to verify and evaluate the accuracy of
information or investigate the accuracy of information when on
notice of questions concerning the accuracy of such information acts
in reckless disregard or deliberate ignorance sufficient to charge him
with knowledge of the falsity of the claims in question.
87.Under the False Claims Act, "'knowing' and `knowingly' mean that
a person, with respect to information (1) has actual knowledge of the
information; (2) acts in deliberate ignorance of the truth or falsity of
the information; or (3) acts in reckless disregard of the truth or
falsity of the information, and no proof of specific intent to defraud
is required." 31 U .S .C . 3729 (b); see also O.C.G.A. Section 49-4168 .
88 .In considering the requisite scienter which subjects a defendant to
liability under the False Claims Act, "no proof of specific intent to
defraud is required ." Under the False Claims Act, a defendant is
29
Filed 11/13/08 Page 30 of 57
liable for acting in "reckless disregard of the truth or falsity of the
information" or acting in "deliberate ignorance of the truth or falsity
of the information ."
89 . In this case, the Archbold Defendantss familiarized themselves with
the requirements of the federal-state Medicaid program with respect
to intergovernmental transfers and federal matching funds . Their
intimate knowledge of potential loopholes within the Medicaid
program led them to conspire to submit false information and make
false representations in an effort to exploit such loopholes and obtain
federal matching mo n eys to w hich they were n ot e ntitled .
UNDER THE FEDERAL AND STATE FALSE CLAIMS ACTS,
DR. SIMMS QUALIFIES AS AN ORIGINAL SOURCE
90.The Archbold Defendants' scheme centered on the representation
that Dr. Simms exposed as a fraud-----that the hospital was
supposedly owned and operated by a city hospital authority .
91 . Dr. Simms initiated and financed extensive efforts to expose the
sham before there was any public disclosure of any fraud from any
source.
30
Filed 11/13/08 Page 31 of 57
92.With the indictment of Mr. Sellers an d with previous media
coverage of Archbold's admissions related to Mr . Sellers' conduct,
part of the fraudulent scheme at issue has now been publicly
disclosed .
93 . Section 3730{e}(4) of the False Claims Act states :
(4)(A) No court shall have jurisdiction over an action under this
section based upon the public disclosure of allegations or
transactions in a criminal, civil, or administrative hearing, in a
congressional, administrative, or Government Accounting Office
report, hearing, audit, investigation, or from the news media,
unless the action is brought by the Attorney General or the person
bringing the action is an original source of the information .
(B) For purposes of this paragraph, "original source" means an
individual who has direct and independent knowledge of the
information on which the allegations are based and has
voluntarily provided the information to the Government before
filing an action under this section which is based on the
information .
31 U.S.C. § 3730(e) (4); see O.C.G.A. Section 49-4-168 .2(j) (2) .
94 .The federal and state False- Claims Acts define "orig inal source" as
"an individual who has direct and independent knowledge of the
information on which the allegations are based and has voluntarily
provided the information to the Government before filing an action ."
31 U.S.C. § 3730{e} (4) (B) (emphasis added) . Dr. Simms qualifies
31
Filed 11/13/08 Page 32 of 57
as an "original source" under the federal and state False Claims
Acts' definition .
95 .Dr . Simms served a leading and critical role in the exposure and
disclosure of the fraudulent sham . Without his efforts, there would
have been no confession or admission by Archbold either in
Novembe r of 2007 or in February of 2008 .
96 . The purpose of the False Claims Act is to enlist the public's help in
uncovering specifically every perpetrator of fraud . Dr. Simms'
efforts have served that important purpose .
97 . The stated purpose of the 1986 Amendments to the False Claims
Act was to enhance the federal government's ability to recoup losses
sustained due to fraud . Congress found that only a coordinated effort
by the government and citizens would curb the severe effects of
false claims on the federal government . To meet this end, Congress
modified significantly the qui tam provisions in the Act . Congress
intended the revisions to co rrect the restrictive co urt i nt erpretations
on qui tam jurisdiction and encourage would-be whistleblowers to
come forward .
32
Filed 11/13/08 Page 33 of 57
98 . By rewarding individuals who took the significant personal risk of
exposing fraud, Congress sought to make the FCA a more effective
weapon for the government .
99 .The purpose of the public disclosure bar is to prevent parasitic suits
by opportunistic latecomers who ad d nothing to expos ure of the
fraud . Such purpose has no relevance to this case in which a private
citizen initiated and conducted an independent investigation at great
personal expense to expose what he knew to be a sham and provided
information to the government regarding the sham before there was
any public disclosure from any source .
100.
Dr. Simms qualifies as an original source under the federal and
state False Claims Acts . Dr. Simms had direct and independent
knowledge that Archbold was not owned or operated by a county or
city h ospita l auth o rity . Dr. Simms waged and financed an eightmonth effort to expose the sham of Archbold manipulating and
misrepresenting its status and relat i o nship with a city hospital
authority . Dr . Simms had direct and independent knowledge of the
information on which the allegations are based and voluntarily
provided the information to the government before there was any
33
Filed 11/13/08 Page 34 of 57
public disclosure and before filing an action under the False Claims
Act.
101 .
Dr. Simms' knowledge-of t he sha m was ga ined through his own
experience and labor. He gained such knowledge of the sham
independently of any public disclosure from the enumerated specific
sources listed in the False Claims Act .
102. Dr . Simms is the original source of the central allegation that
the hospital authority was a sham mechanism being misused by
Archbold for improper purposes . That allegation is at the heart of the
damages sustained by the United States, the State of Georgia, and
the federal-state Medicaid program .
103 .
Dr. Simms had direct and in dependent knowledge of t he
information upon which he is basing his action under the federal and
state False Claims Acts.
104.
Dr. Simms' efforts set the government on the "t rail" of
investigating the improprieties at issue and prompted and pushed
Archbold to confess in part the fraudulent attestations and activities
to the Georgia Department of Community Health .
ARCHSOLD'5 FALSE REPRESENTATIONS TO THE 340B
DRUG DISCOUNT PROGRAM ESTABLISHED B Y FEDERAL
LAW FOR CERTAIN D SH HOSPITALS
34
105 .
Filed 11/13/08 Page 35 of 57
Archbold has also made false representations with the
fraudulent intent of qualifyi ng fo r d r ug discounts under the 34 0B
Drug P ricing Program resulted from enactme nt of Publ ic Law 1 02-
585, the Veterans Health Care Act of 1992, which is codified as
Section 340B of the Public Health Service Act . Section 340B limits
the cost of covered outpatient drugs to certain federal grantees,
federally-qualified health center look-alikes and qualified
disproportionate share hospitals . Entities that participate in the
program receive substantial savings on pharmaceuticals .
106.
In addition to the cost savings available through the 340B
Program,
the 340B Pr ime
V endor Program
(PVP)
provides
additional savings to 340B participants registered with the Prime
Vendor . The program currently provides access to 340B sub-ceiling
prices for over 2,800 drug products, access to multiple wholesale
distributors at favo rable rates, and access to other related value-
added products . The PVP is free to all 340 B covered en t i t ies, but the
covered entity must enroll in the PVP .
107 . Archbold has provided false information and has made false
representations to qualify for the 340B discount . To qualify as a
disproportionate share hospital (as defined in Section 1886(d)(1)(B))
35
Filed 11/13/08 Page 36 of 57
of the SSA, the hospital must be "owned or operated by a unit of
State or local government, is a public or private non-profit
corporation which is formally granted governmental powers by a
unit of State or local government, or is a private non-profit hospital
which has a contract with a State or local government to provide
health care services to low income individuals who are not entitled
to benefits under title XVIII of the Social Security Act or eligible for
assistance underr the State plan under this title ."
108.
In an effort to qualify as eligible under the 340B drug discount
program, Archbold presented a sham contract in which it supposedly
agreed to provide "emergency services and hospital services on a
best-efforts basis to the sick and indigent citizens of Thomas
County" for "one-dollar" per year for five years . This contract lacks
any reasonable consideration and is a sham used by Archbold to
achieve 340B drug discounts .
109.
Dr. Simms does not know the p recise a mo unts saved by
Archbold under the 340B Dru g
Discount, Program. Upon
information and belief, Archbold has received hundreds of
thousands of dollars in drug discounts due to Archbold's false
representation that it actually operates under a contract to provide
36
Filed 11/13/08 Page 37 of 57
"emergency services and hospital services" to the sick and indigent
citizens of Thomas County for one-dollar per year for five years .
INT ROD UCTION TO THE FEDERAL-STATE MEDICAID
PROGRAM
110. To understand the motivation behind the Archbold Defendants'
fa l se representatio n s th at Archbold was owned and operated by a
city hospital authority, th e fe de ral-state Medicaid program must be
discussed.
Ill .
Medicaid finances health care for an estimated 53 million low-
income Americans . Medicaid is the third-largest mandatory spending
program in the fe deral budget a nd one of the largest co mpo nents of stat e
budgets, second only to education . The program fulfills a crucial
national role by providing health coverage for a variety of vulnerable
populations, including low-income families with children and certain
people who are elderly, blind, or disabled .
112 . Congress has structured Medicaid as a shared responsibility of
the federal government and the states, with the federal share of each
state's Medicaid payments determined by a formula specified by
law. The Centers for Medicare & Medicaid Services (CMS), within the
Department of Health and Human Services (HHS), is the federal agency
37
Filed 11/13/08 Page 38 of 57
responsible for the program, an d the states design and administer th eir
progra m s with some discretio n consistent with federal law.
1 13 . State and local governments may legitimately use IGTs to carry out
their
shared
governmenta l
functions, such
as collecting and
redistributing revenues to provide essential government services . By
using IGTs, states can transfer funds to or from local-government
entities, such as government-owned nursing homes, as part of complex
financing schemes that boost the federal share of Medicaid payments .
114 . The Archbold Defendants used a financing scheme involving
IGTs to create the illusion of a valid state Medicaid expenditure to a
health care provider .
115 . The Archbold Defendants' scheme was a premeditated
sophisticated scheme to increase its Medicaid payments . Under the guise
that it was owned and operated by a city hospital authority, Archbold
transferred money to the Department of Community Health and such
funds essentially made a round-trip from Archbold to the Department of
Community Health and then back to Archbold with federal matching
dollars .
1. 1 6 .
As a
result
of s uch
round-trip arrangement and fal se
representations that Archbold was owned and operated by a city
38
Filed 11/13/08 Page 39 of 57
hospital authority, Archbold illegally obtained excessive federal
Medicaid matching funds .
THE ARCHBOLD DEFENDANTS' SCHEME WAS DESIGNED
AND IMPLEMENTED TO OBTAIN INCREASED UPPER
PAYMENT LIMITS
1 17.
The Archbold D efendants' scheme to mi srepresent Archbold 's
relationship with a local city hospital authority was motivated by the
objective to obtain illegally increased Medicaid "upper payment
limits" (UPL) and increase its DSH payments from the Georgia
Indigent Care Trust Fund discussed below .
11 8. Upp er payment limits apply to payments for the services of
inpatient hospitals, nursing facilities and intermediate-care facilities
for the mentally retarded, and to payments for the services of
outpatient hospitals and clinics . See 42 C.F.R. § § 447 .272, 447.321 .
Upper payment limits set a maximum amount that a state may pay to
Medicaid providers and still receive federal matching funds . A state
could conceivably make payments to providers in excess of the
UPLs but it could not legitimately receive any federal matching
contributions towards the excess amount .
39
1 19.
Filed 11/13/08 Page 40 of 57
The applicable 2001 Rule was proposed October 10, 2000, and
finalized on January 12, 2001 ("2001 Rule") . The Summary of the
2001 . Rule as published in th e Federal Register reads as follows :
SUMMARY : This final rule modifies the Medicaid upperr payment
limits for inpatient hospital services, outpatient hospital services,
nursing facility services, intermediate care facility services for the
mentally retarded, and clinic services . For each type of Medicaid
inpatient service, existing regulations place an upper limit on overall
aggregate payments to all facilities and a separate aggregate upper limit
on payments made to State-operated facilities . This final rule
establishes an aggregate upper limit that applies to payments made to
government facilities that are not State government-owned or operated,
and a separate aggregate upper limit on payments made to privatelyowned and operated facilities . This rule also eliminates the overall
aggregate upper limit that had applied to these services .
With respect to outpatient hospital and clinic services, this final rule
establishes an aggregate upper limit on payments made to State
government-owned or operated facilities, an aggregate upper limit on
payments made to government facilities that are not State governmentowned or operated, and an aggregate upper limit on payments made to
privately-owned and operated facilities .
These separate upper limits are necessary to ensure State Medicaid
payment systems promote economy and efficiency . We are allowing a
higher upper limit for payment to non-State public hospitals to
recognize the higher costs of inpatient and outpatient services in public
hospitals . In addition, to ensure continued beneficiary access to care
and the ability of States to adjust to the changes in the upper payment
limits, the final rule includes a transition period for States with
approved rate enhancement State plan amendments .
66 Fed . Reg . 3148 (Jan. 12, 2001) .
120 . The 2001 Rule effectuated the following UPL revisions . With
rega rd to inpatient and long-term care services, t h e new regulation
eliminated the aggregate UPL for all categories of facilities
40
Filed 11/13/08 Page 41 of 57
combined and replaced it with separate UPLs for each of the three
categories of facilities . The UPL for state-owned facilities remained
at a reasonable estimate of what would have been paid for those
services under Medicare payment principles, i .e, at 100 percent.
Likewise, the new UPL for private facilities was set at a reasonable
estimate of what would have b een paid for those services u nder
Medicare payment principles, or 100 percent . Finally, th e U PL for
county or city locally-owned pub lic hospitals was set at 1 50
percent . That 150 percent payment was the target of the
Archbold Defendants' scheme to falsely represent that it was
owned and operated by a city hospital authority .
121 . In addition, the 2001 Rule effectuated a parallel set of limits for
outpatient services .
122 . The 2001 Rule also established transition periods for States that
had previously implemented UPL supplemental payment plans .
Specifically, States that had previously obtained HHS approval of
their supplemental payment plans were eligible for one of three
transition periods, depending on the date of HHS approval . States
that had implemented plans on or after October 1, 1.999, were given
until September 30, 2002, to comp ly wit h the new regul ation. States
41
Filed 11/13/08 Page 42 of 57
that had implemented supplemental payment plans between October
1, 1992 and October 1, 1999 were subject to a five-year transition
period mandating specific but g radual payment reduction s . And,
finally, states that had implemented supplemental payment plans
before October 1, 1992, were subject to an eight-year transition
period which also mandated gradual payment reductions . As noted
in the Federal Register, these transition periods were designed "to
ensure continued beneficiary access to care and the ability of States
to adjust to the changes in the upper payment limits ." 66 Fed. Reg .
3148 (Jan . 12, 2001) .
123. The 2001 UPL Rule also contained new reporting requirements
designed to aid the Secretary in ensuring proper use of the 150
pe rcent rul e by S tates. The reporting requirements obligate d States
with supplemental payment programs to identify (1) the total
Medicaid payments made to each locally-owned hospital and (2) the
reasonable estimate of the amount that would be paid for the
services furnished by each hospital under Medicare payment
principles . As noted in the Federal Register, "the purpose of this
requirement was to ensure the higher payments are appropriate and
are being fully retained by hospitals ." 66 Fed. Reg . 3158 .
42
Filed 11/13/08 Page 43 of 57
124 . During the transition period the Archbold Defendants falsely
represented that Archbold was owned and operated by a city hospital
authority so that Archbold could obtain upper payment limits under
the 150 percent rule .
THE ARCHBOLD DEFENDANTS' SCHEME WAS ALSO
DESIGNED AND IMPLEMENTED TO OBTAIN FEDERAL
DISPROPORTIONATE SHARE HOSPITAL PAYMENTS
125 . Additionally, the Archbold Defendants falsely represented that
Archbold is owned and operated by a city hospital authority in a
scheme to obtainn increased disproportionate share hospital payments
under the federal-state Medicaid program .
126 . The Archbold Defendants ' false representations that Archbold
was owned and operated by a city hospital authority were motivated
by a sophisticated awareness of loopholes in the federal-state
Medicaid program . That loophole is discussed below .
127. Since 1981
the Medicaid statute has directed States to set
Medicaid payments rates that take into account "the situation off
hospitals which serve a disproportionate number of low-income
patients with special needs." 42 U .S .C. § 1396a (a) (13) (A) (iv) .
This requi rement i s commonly referred
to as the
Med icaid
disproportionate share hospital (DSH) payment adjustment . As
43
Filed 11/13/08 Page 44 of 57
noted, DSH payments a re des igned to ass ist safety net hospitals in
making up for high levels of uncompensated care . The DSH
payments that States make to safety net hospitals also draw federal
matching funds .
128 . The Medicaid Voluntary Contr i bution and Provider -Specific
Tax Amendments of 1 991 (P.L. 1 02-234) was passe d in Novemb er
of that year. The law estab l is hed the first upper bounds o n DSH
payments and prohibited the use of donated funds and health care
related taxes that were not broad based for the purpose of claiming
federal matching payments . It established a cap on the portion of the
state share of Medicaid spending that could be raised through
provider-specific taxes and established aggregate national and state
limits on DSH payments . The national limit on DSH adjustments
was set at 12% of Medicaid costs in any year, and beginning in
1993, state DSH adjustments would be limited to published amounts
above which federal matching payments would not be available .
129 . Under the law, each state would be eligible to receive the DSH
adjustment amount published in the Federal Register for that year and
no more than that amount . The published amount for each fiscal year
would be based on 1992 payments . States with 1992 DSH
44
Filed 11/13/08 Page 45 of 57
adjustments exceeding 12% of their 1992 Medicaid costs would
continue to receive allotments at their 1992 level until those
payments became 12% of total Medicaid spending in that state . These
states were classified as "high" DSH states . States wi th 1992 DSH
payments below 12% could receive allotments increasing their DSH
payments up to a limit of 12 percent .
130 . The Medicaid Voluntary Contribution and Provider-Specific
Tax Amendments spec ifically permitted legiti mate i ntergovernmental
transfers while restricting the use of the other two funding
mechanisms . The law restricted the Secretary of HHS from limiting
the use, as the non-federal share of Medicaid, of funds derived from
state or local taxes or funds legitimately transferred by units of
government within the state .
131 . At the time, few states utilized intergovernmental transfers to
generate federal matching payments . Despite the remaining
intergovernmental transfer loophole, the upper caps on DSH
payments had a significant impact on total DSH spending --- the
rapid climb in DSH payments had been stopped.
45
1 32.
Filed 11/13/08 Page 46 of 57
The Archbold Defendants' scheme to increase DSH payments
required a sophisticated understanding of the limits, loopholes, and
restrictions under the federal-state Medicaid DSH program .
133 .
Under the guise that it was owned and operated by a city
hospital authority, Archbold illegally obtained federal DSH
payments from the Georgia Indigent Care Trust Fund . The Archbold
Defendants' false representations have resulted in millions of dollars
in excess federal matching payments to Archbold .
134. The Georgia Department of Community Health Division of
Medical Compliance has adopted rules governing the Indigent Care
Trust Fund . Un der C hapter 350-6- .03 (7) of the Rules of the
Department of Community Health Division of Medical Assistance,
"In the event that a disproportion ate share hospital knowingly and
willfully makes or causes to be made any false statement or
misrepresentation of material fact with respect to the hospital's use
of funds from the Trust Fund or in response to any request for
information from the Department related to the Trust Fund,
including without limitation the submission of any report required
pursuant to these Rul es, the Depart m ent may, i n ad dition to any
other legal remedies available, assess liquidated damages against the
46
Filed 11/13/08 Page 47 of 57
disproportionate share hospital under its Letter of Agreement in an
amount not to exceed the disproportionate share payment for the
year in which the false statement or misrepresentation occurred." 1
135 . The liquidated damages provided by the ICTF Rules include the
intergovernmental transfer from t he hospital autho rit y which is
matched by federal funds . If enforced, this liquidated damages
provision pr ovides significant deterrence aga inst
hospitals
submitting false claims
136 . The Medicaid loopholes that the Archbold Defendants
exploited with false representations were well-known to Archbold's
managers . The Archbold Defendants' leaders knew that Archbold
was reporting inter-governmental transfers . Archbold's leaders knew
that the hospital was receiving millions of dollars in upper payment
limits and DSH payments discussed above . There is no possible
way that the Archbold Defendants' leaders could have believed that
Archbold was legitimately entitled to such payments through
intergovernmental transfers reserved for hospitals owned and
operated by city or county hospital authorities .
137.
The Medicaid program depends heavily upon, the truthfulness
1 Rule 350-6-.03 was adopted on September 7, 1993 .
47
Filed 11/13/08 Page 48 of 57
of medical providers . At all times relevant to this First Amended
Complaint it was common knowledge in the healthcare industry that
the government lacks adequate resources to conduct a full-scope
audit of each of the thousands of providers nationwid e, including
hospitals, which file claims for Medicaid payment .
138 .
Because of limited resources, field audits are usually limited to
specific issues . The Archbold Defendants took advantage of
Medicaid's limited resources by submitting false representations that
it was owned and operated by a city hospital authority with the
expectation that they would not be discovered upon audit .
139.
Archbold had highly paid executives with high leve l s of
expertise in Medicaid reimbursement . Archbold could afford the
best consultants, qualified personnel, training and resources required
to properly report their operations to Medicaid as required by law .
1.40. Archbold
is a
major regional hospita l
with net assets
(organizational equity) exceeding $177 million dollars reported in
fiscal year 2005 . With respect to claims for millions of dollars in
federal-state Medicaid payments, basic precautions at major
hospitals require checks and balances to ensure the accuracy of
48
Filed 11/13/08 Page 49 of 57
information and documents submitted to the state and federal
government .
141 . At a minimum, the Archbold Defendants failed to apply basic
and fundamental measures and precautions to verify and evaluate the
accuracy of the information and documents submitted to the United
States government and the State of Georgia . At a minimum, the
Archbold Defendants failed and refused to investigate the accuracy
of such information when on obvious notice that Archbold was not
owned and operated by a city or county hospital authority and would
not qualify for intergovernmental transfers and the federal matching
funds it was receiving by reporting such intergovernmental transfers
year after year . Archbold's executives and employees acted with
intent to defraud the federal-state Medicaid program, o r i n t he
alternative, in reckless disregard or deliberate ignorance sufficient to
charge them with knowledge of the falsity of the claims in question .
FIRST CAUSE OF ACTION
False Claims Act ; Presentation of False Claims 31 U .S.C . § 3729
(1) and O.C.G.A. Section 49-4-168 .1
49
142.
Filed 11/13/08 Page 50 of 57
Plaintiff repeats and realleges the foregoing Paragraphs as if
fully set forth herein .
143 . The Archbold Defendants knowingly presented or caused to be
presented false or fraudulent claims for payment or approval to the
United States and to the Georgia Department of Community Health .
144. By virtue of the false or fraudulent claims made by the
Archbold Defendants, the United States and the State of Georgia
suffered damages and therefore is entitled to treble damages under
the federal and state False Claims Acts, to be determined at trial,
plus a civil penalty of $5,500 to $11,000 for each violation .
SECOND CAUSE OF ACTION
False Claims Act : Making or Using False Record or Statement
To Cause Claim to be Paid
(31 U.S.C. §3729(a) (2) and O.C.G.A. Section 49-4-168 .1)
145 . Plaintiff repeats and re-alleges the foregoing Paragraphs as if
fully set forth herein .
146. The Archbold Defendants knowingly made, used, or caused to
be made or used false records or statements to get false and
fraudulent claims paid or approved by the United States and the
Georgia Department of Community Health .
147 . By virtue of the false records or false statements and
50
Filed 11/13/08 Page 51 of 57
representati o ns made by the Archbold D efendants, the U nited States
and the State of Georgia suffered damages and therefore is entitled
to treble damages under the federal and state False Claims Acts, to
be determined at trial, plus a civil penalty of $5,500 to $11,000 for
each violation .
THIRD CAUSE OF ACTION
False Claims Act-, Conspiring to Submit Fa lse Claims
(31 U.S.C . §3729(a) 3 and O.C.G.A. Section 49-4-68,1
148 . Plaintiff repeats and realleges the foregoing Paragraphs as
though fully set forth herein .
149 . The Archbold Defendants conspired to defraud the United
States and the State of Georgia by submitting false or fraudulent
claims for payments from the United States and the State of Georgia
for movies to which they were not entitled, in violation of 31 U .S.C.
§ 3729(a)(3) and O .C.G .A. Section 49-4-168 .1 . As part of schemes
and agreements to obtainn moneys from the United States and the
State of Georgia in violation of federal and state laws, the
Defendants conspired together to receive illegal remunerations based
on false representations, attestations, information, and
documentation .
150.
By virtue of D efendants' conspiracy to def raud the United
51
Filed 11/13/08 Page 52 of 57
States and the State of Georgia, the United States and the State of
Georgia suffered damages and therefore are entitled to treble
damages under the federal and state False Claims Act, to be
determined at trial, plus a civil penalty of $5,500 to $ 1 1,000 for each
violation.
F OU RTH CAUSE OF ACTON
Violations of 3 1 USC § 3729(a) (7) and O .C.G.A. 49-4-168 .1
Reverse False Claims
151 . Plaintiff repeats and realleges the foregoing Paragraphs as if
fully set forth herein.
152. Defendants knowingly and consciously falsified documents and
made false representations in an illegal scheme to obtain money
from the United States and the State of Georgia .
153 . Defendants have repeatedly created false records and made
false statements .
154 . Defendants are aware that they have been overpaid and they are
obligated to repay those overpayments to the federal . and state
governments.
155 . The Archbold Defendants are liable to the government for three
times the amount of the over-payments .
52
Filed 11/13/08 Page 53 of 57
156. Defendants are also liable for a civil penalty attaching to all
claims in an amount no less than $5,500 nor more than $11,000 per
claim.
FIFTH CAUSE OF ACTIN
Submission of False Claims in Violation of 31 USC § 3729(a) (1)
and O.C.G.A. Section 49-4-168 .1
157 . Plaintiff repeats and re-alleges the foregoing Paragraphs as if
fully set forth herein.
158. Because Archbold must certify its compliance with all
applicable regulations as a condition of payment, the false
certification of compliance, which has been willfully and knowingly
done, constitutes a false claim under 31 USC § 3729 and O .C .G.A .
Section 49-4-168 .1 .
159. By virtue of the false or fraudulent claims made by Archbold,
the United States and the State of Georgia suffered damages and
therefore are entitled to treble damages under the federal and state
False Claims Acts, to be determined at trial, plus a civil penalty of
$5,500 to $11,000 for each violation .
PRAYERS FOR RELIEF
53
Filed 11/13/08 Page 54 of 57
On behalf of the United States and the State of Georgia,
Plaintiff demands and prays for judgment against the Archbold
Defendants, jointly and severally, as follows :
160.
On the First, Second, Third, Fourth, and Fifth Causes of Action
under the federal and state False Claims Acts, for the amount of the
United Stat es' and the State of Geo rg i a's damages, trebled as
required by law, and such civil penalties as are required by law, for a
qui tam relator's share as specified by 31 U .S .C . § 3730 and
O.C.G .A. Section 49-4-168 .2, for attorneys fees, costs and expenses
as provided by 31 U .S.C. § 3730 and O .C.G.A . Section 49-4-168 .2,
and for all such further relief as may be just and proper .
161 . Fo r a qui tam relator 's share with respect to any a lternative
remedy as specified by 31 U .S .C. § 3730 and O .C.G.A. Section 494-168.2(h), for attorneys fees, costs and expenses as provide d by 31
U .S .C. § 3730, and for all such further relief as may be just and
proper.
JURY TRIAL IS HEREBY DEMANDED .
54
Filed 11/13/08 Page 55 of 57
Respectfully submitted, this the L?f clay o f November, 2008.
Bryan . V roon
Georgia Bar No . 729086
Law Offices of Bryan A . Vroon LLC
1718 Peachtree Street Suite 1088
Atlanta Georgia 30309
(404) 607-6712
(404) 607- 6711 fax
bvroon(&vclawfirm .com
55
Filed 11/13/08 Page 56 of 57
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DIST RICT O F GEORGIA
ATLANTA DIVI SION
UNITED STATES OF AMERICA
AND THE STATE OF GEORGIA,
ex . rel., WESLEY SIMMS, M .D.
} Civil Acti on No . :
Relator/Quitam Plaintiff,
}
TO BE FILED IN CAMERA
UNDER SEAL
}
}
JOHN D . ARCHBOLD
MEMORIAL HOSPITAL, INC .
HOSPITAL AUTHORITY OF
THE CITY OF THOMASVILLE,
JOHN DOES 1 THROUGH 100,
}
Defendant s.
CERTIFICATE OF SERVICE
This is to certify that I have this day served a copy of the within and
foregoing Qui Tam Relator's First Amended Complaint by depositing a true
and correct copy of same in the United States Mail, Certified Mail, postage
prepaid, addressed as follows :
Honorable Michael B . Mukasey
Attorney General of the United States
5111 Main Justice Building
10'h & Constitution Avenue , N.W .
Washington , D.C. 2021.0
56
Filed 11/13/08 Page 57 of 57
The Honorable David Nahmias
United States Attorney
Civil Process Clerk
Northern District of Georgia
Richard B . Russell Federal Building
75 Spring Street, S .W.
Suite 600
Atlanta, GA 30303-3309
The Honorable Thurbert E . Baker
Attorney General State of Georgia
Office of the Attorney General
40 Capitol Square, SW
Atlanta, Ga 30334
This Nay of November, 2008 .
/'~' Z' '- = ='- Brya
57
. Vroon

Archbold Filed First Amended Complaint

Transcription

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