UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA. v. C.A. No. 1:09CV420

Transcription

1 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 1 of 24 UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA UNITED STATES OF AMERICA, ex. rel. COMPLIN, Plaintiff/Relator, v. C.A. No. 1:09CV420 NORTH CAROLINA BAPTIST HOSPITAL and CAROLINAS HEALTHCARE SYSTEM, Defendants. NORTH CAROLINA BAPTIST HOSPITAL S BRIEF IN SUPPORT OF MOTION TO DISMISS PLAINTIFF S SECOND AMENDED COMPLAINT

2 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 2 of 24 TABLE OF CONTENTS NATURE OF THE MATTER BEFORE THE COURT... 1 PLAINTIFF S ALLEGATIONS... 2 A. The FCA Claim... 2 B. The Retaliation Claims against NCBH... 4 QUESTIONS PRESENTED... 4 ARGUMENT... 4 I. STANDARD OF REVIEW... 4 II. THE MAY 2008 RELEASE BARS ANY CLAIMS THAT EXISTED ON OR PRIOR TO THE RELEASE A. The Court Can Properly Consider the Release as an Affirmative Defense In Ruling on this Motion to Dismiss B. Binding Fourth Circuit Precedent Requires Enforcement of the Release to Bar Vincoli s FCA Claim against NCBH III. THE COMPLAINT FAILS TO ALLEGE THE REQUISITE SCIENTER IV. THE SECOND AMENDED COMPLAINT FAILS TO SATISFY THE PLEADING REQUIREMENTS OF RULE 9(B) A. FCA Claims Must Satisfy Rule 9(b) B. The Complaint Fails to Allege the Identity of Any Person Who Participated in the Alleged Fraud C. Vincoli Cannot Plausibly Allege that He Has Firsthand Knowledge of Purported Fraudulent Acts V. THE COMPLAINT FAILS TO STATE ANY PLAUSIBLE RETALIATION CLAIM A. Vincoli Cannot Assert Claims For Alleged Retaliatory Acts That Occurred After His NCBH Termination B. Even if Vincoli Can Sue for Post-Employment Acts, the Complaint Fails to Allege Plausible Retaliation Claims CONCLUSION ii

3 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 3 of 24 North Carolina Baptist Hospital ( NCBH ) pursuant to Local Rules 7.2 and 7.3 and Federal Rules of Civil Procedure 9(b) and 12(b)(6), respectfully submits this brief in support of its Motion to Dismiss Plaintiff s Second Amended Complaint. NATURE OF THE MATTER BEFORE THE COURT This False Claims Act qui tam action arises out Plaintiff s allegations that NCBH and Carolinas Healthcare Systems ( CHS ) (together, the Hospitals ) filed erroneous cost reports with Medicare by failing to reduce the costs of providing healthcare to their employees ( Domestic Care, in Medicare parlance) to the hospitals actual out-ofpocket costs. The present motion addresses four fundamental pleading deficiencies that compel dismissal of the Second Amended Complaint. First, Joseph Vincoli, [t]he real Plaintiff/Relator, executed a general release in favor of NCBH on May 28, 2008 that bars any claims prior to that release. Second, the Second Amended Complaint fails to allege sufficient facts to establish the necessary element of scienter. Third, the Second Amended Complaint fails to satisfy Rule 9(b) as it both fails to identify any person who actually participated in the alleged fraud and lacks the required indicia of reliability. Fourth, the Second Amended Complaint fails to state a viable retaliation claim because the alleged retaliation occurred years after Vincoli s NCBH termination and none of the factual allegations connect the purported retaliatory acts to Vincoli s pursuit of this lawsuit. 1

4 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 4 of 24 PLAINTIFF S ALLEGATIONS Although the nominal Plaintiff in this action is Complin, a Delaware general partnership, [t]he real Plaintiff/Relator is Joseph H. Vincoli ( Vincoli ). (ECF No. 62 at 7). 1 Vincoli briefly worked for NCBH from July 10, 2006 until his termination in October 2, (Id. at 8-9.) Following his termination, Vincoli entered into a Settlement and Mutual Release Agreement with NCBH ( Release ) on May 28, 2008, in which he released all claims that he might have had against NCBH prior to the effective date of the agreement, including all claims under state or federal law (Id. at 9.) 2 In 2009, Vincoli filed this qui tam action under seal against the Hospitals. (See ECF No. 1.) Seven years later, Vincoli filed the Second Amended Complaint (the Complaint ) (ECF No. 62). The Complaint asserts that NCBH violated the False Claims Act ( FCA ), 31 U.S.C. 3729(a)(1)(A)-(B), and wrongfully retaliated against him for purported whistleblowing actions he took after his termination. A. The FCA Claim The Complaint alleges that NCBH violated the FCA by knowingly submitting cost reports to Medicare that misrepresented the costs of NCBH s Domestic Care. (ECF No. 1 NCBH contends that Mr. Vincoli, not Complin, is the real party in interest, and intends to file a motion pursuant to Fed. R. Civ. P. 17 to substitute Mr. Vincoli as the named plaintiff. NCBH requested that Mr. Vincoli agree to the substitution, but he declined. 2 A copy of the Release is attached as Exhibit 1 to the Declaration of Philip J. Mohr. Because the Release is incorporated by reference into the Second Amended Complaint and is integral to its allegations, the Court may consider it in connection with a Rule 12(b)(6) motion. See infra Section II.A. 2

5 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 5 of at 1.) Medicare requires that when a medical provider obtains services, facilities, [or] supplies from organizations related to it by common ownership or control, the costs reported to Medicare are includable in the allowable cost of the provider at the cost to the related organization. 42 C.F.R This is known as the Related-Party Rule. The Complaint, in truncated and conclusory allegations, 3 asserts that: (1) NCBH, by providing Domestic Care to its own employees, engaged in a related-party transaction for purposes of Medicare, (ECF No. 62 at 12), and that (2) Medicare regulations required NCBH, when reporting its Domestic Care costs, to reduce those related-party charges to their actual out-of-pocket costs which, Vincoli alleges, NCBH did not do, but instead charged at a reduced amount. (Id. at 13.) The Complaint further alleges that Vincoli has examined select examples of publicly available Medicare Cost Reports from providers that operate under NCBH s umbrella, and that his review of those Reports lead[s] [him] to the plausible inference that NCBH did not identify its Domestic Care charges as related-party transactions and did not reduce [those charges] to actual unrecovered costs. (Id. at 18, 69.) Vincoli asserts that the purported fraud occurred both prior to and long after his short-lived NCBH employment. (Id. at 9, 56.) 3 Of the 121 enumerated paragraphs in the Complaint, however, only approximately 20 actually pertain to the Hospitals or their purported wrongdoing. (ECF No. 62 at 1-2; 18; 20-22; 46-47; 57-63; 65-67; ) The remainder of the allegations purport to explain Medicare provisions, like the Related-Party Rule, and provide information about employee healthcare benefit plans to the Court. 3

6 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 6 of 24 B. The Retaliation Claims against NCBH The Complaint also asserts retaliation claims against NCBH under both the federal and North Carolina False Claims Acts, alleging that NCBH engaged in two distinct retaliatory acts, both of which occurred years after NCBH terminated Vincoli in First, Vincoli alleges that NCBH filed a lawsuit against him in state court in January (Id. at 88.) Second, he alleges that in 2013, NCBH somehow caused the Governor of North Carolina to both reclassify his position with the Department of Public Safety ( DPS ) as an exempt management position, and then further caused the Governor to terminate that very position. (Id. at 99.) NCBH now brings this motion to dismiss. QUESTIONS PRESENTED 1. Whether the May 2008 Release signed by Vincoli precludes him from asserting a claim for acts that pre-date the Release? 2. Whether the Complaint satisfies the Rule 9(b) s pleading standard regarding the identity of the purported wrongdoer and relator s personal knowledge? 3. Whether the Complaint adequately alleges scienter? 4. Whether Mr. Vincoli states plausible retaliation claims based on purported retaliatory actions that occurred after his discharge? I. STANDARD OF REVIEW ARGUMENT To survive a Rule 12(b)(6) motion to dismiss, a complaint must state a claim to relief that is plausible on its face. U.S. ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 455 (4th Cir. 2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A claim will not survive where, if all facts are taken as true, the complaint still fails to 4

7 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 7 of 24 maintain a cause of action. See U.S. ex. rel. Lindsey v. Easter Seals UCP N.C., Inc., No. 1:06CV125, 2007 WL at *3 (W.D.N.C. Oct. 25, 2007). [L]egal conclusions, elements of a cause of action, and bare assertions devoid of further factual enhancement fail to constitute well-pled facts for Rule 12(b)(6) purposes. Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). In ruling on a Rule 12(b)(6) motion, where facts sufficient [and necessary] to rule on an affirmative defense are alleged [on the face of] the complaint, the defense may be reached by a [Rule 12(b)(6)] motion to dismiss. Goodman v. Praxair, Inc., 494 F.3d 458, 464 (4th Cir. 2007). II. THE MAY 2008 RELEASE BARS ANY CLAIMS THAT EXISTED ON OR PRIOR TO THE RELEASE. In May 2008, Vincoli voluntarily and knowingly entered into the broadly worded Release. (ECF No. 62 at 9). The Court should dismiss the Complaint s FCA Claim against NCBH for any claims that existed on or before the date of the Release. See Mohr Decl. Exhibit 1 (Release). A. The Court Can Properly Consider the Release as an Affirmative Defense In Ruling on this Motion to Dismiss. A release is a recognized, enumerated affirmative defense under F.R.C.P. 8(c). In the instant case, Vincoli does not deny the existence or the authenticity of the Release, nor does he deny the integral nature of the Release to his FCA Claims. (ECF No. 62 at 9). Accordingly, the Court can examine and consider the Release in ruling on this Rule 12(b)(6) motion. In addition to the [complaint], court[s] may look to documents attached 5

8 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 8 of 24 thereto, documents attached to a Rule 12 motion that are integral to the complaint and authentic, and matters of public record of which judicial notice may be taken. McQuade v. Xerox Corp., No. 5:10-CV-149-FL, 2011 WL at *9, n.4 (E.D.N.C. Feb. 1, 2011); Am. Chiropractic Ass n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004) ( when a defendant attaches a document to its motion to dismiss, a court may consider it in determining whether to dismiss the complaint [if] it was integral to and explicitly relied on in the complaint and [if] the plaintiffs do not challenge its authenticity. (bracketed text in original; internal quotations and citations omitted); F.R.C.P. 10(c). The Release, which Vincoli authenticates (ECF No. 62 at 9), is clearly integral to the Complaint. Vincoli s FCA Claim is based on allegedly fraudulent acts occurring from approximately 2000 to the present, but he admits that the Release, if enforceable, might limit his FCA Claim to acts post May (Id. at 9, 19-20). By his own admission, if the Release is enforceable, the time period to which his FCA Claim is applicable against NCBH will be substantially limited. Thus, the Court may properly consider the Release in ruling on this Motion to Dismiss. B. Binding Fourth Circuit Precedent Requires Enforcement of the Release to Bar Vincoli s FCA Claim against NCBH. The Release bars Vincoli s FCA Claim for submissions prior to May 28, The Fourth Circuit s decision in United States v. Purdue Pharma L.P., 600 F.3d 319, 333 (4th Cir. 2010) compels dismissal of these claims. In Purdue, the Fourth Circuit held that a relator s release, entered into before the relator files a claim under the FCA, is 6

9 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 9 of 24 enforceable and bars a relator s qui tam claims if the government was aware of the alleged fraudulent conduct prior to the relator filing his lawsuit. Id. Specifically, the Purdue court held that, as long as the allegations of fraud were sufficiently disclosed to the government prior to the relator s filing of the qui tam complaint, the balancing of the competing public policies favored enforcing the release. Id. at Here, Vincoli admits that he made the government aware of NCBH s alleged fraudulent conduct prior to filing the qui tam complaint. [Vincoli] fully disclosed all material facts to the United States on or about May 9, 2008, prior to the filing of the original complaint in this action on June 11, 2009[, and] he fully disclosed to the United States all additional facts and theories of liability raised in this [second] amended complaint on or about January 28, 2016, prior to the filing of this amended complaint. (ECF No. 62 at 6.). In addition, like the Purdue relator, Vincoli executed a broad release in favor of NCBH that encompasses the FCA Claim. In exchange for a lump sum payment of $150,000.00, a letter of reference, and a release of certain claims NCBH may have had against Vincoli, Vincoli released NCBH from any and all claims of any nature, whether known or unknown, which [Vincoli] may have arising out of or in connection with his 4 In so holding, the Fourth Circuit followed the Tenth Circuit s decision in U.S. ex rel. Ritchie v. Lockheed Martin Corp., 558 F.3d 1161, 1168 (10th Cir. 2009) and rejected the Ninth Circuit s decision in U.S. ex rel. Hall v. Teledyne Wah Chang Albany, 104 F.3d 230 (9th Cir.1997), to the extent that the Ninth Circuit s decision conditioned enforceability of a release of an FCA claim upon the government having completed its investigation of the fraudulent allegations prior to the relator filing suit. 7

10 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 10 of 24 employment or termination of his employment, through the Effective Date of this Agreement. (Ex. 1.) The Release also identified a non-exhaustive list of claims that Vincoli specifically released, including any other cause of action based on federal, state, or local law or the common law. (Id.) Because the government was aware of the alleged fraudulent conduct prior to the filing of the complaint, and because of the broad language of the Release, the Release bars Vincoli s FCA Claim against NCBH for actions prior to May 28, III. THE COMPLAINT FAILS TO ALLEGE THE REQUISITE SCIENTER. Scienter is a necessary element of an FCA claim that must be pled with sufficient factual support. See U.S. ex rel. Rostholder v. Omnicare, Inc., 745 F.3d 694, 700 (4th Cir. 2014). The mere disregard of federal regulations or improper internal practices does not create liability under the FCA. Urquilla-Diaz v. Kaplan Univ., 780 F.3d 1039, (11th Cir. 2015). Rather a palpably false statement, known to be a lie when it is made, is required for a party to be found liable under the False Claims Act. U.S. ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166, 1172 (9th Cir. 2006). This intentional deceit must be pled with facts sufficient to support first-hand knowledge of the requisite scienter. See, e.g., Cade v. Progressive Cmty. Healthcare, Inc., No. 1:09-CV-3522-WSD, 2011 WL , at *10 (N.D. Ga. July 14, 2011) (Granting motion to dismiss because [t]he vague, obscure nature of [relator s] allegations, and her extremely limited [personal involvement with the subject matter], [were] insufficient to provide [] the indicia of reliability required by Rule 9(b)). The Complaint does not pass this test. 8

11 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 11 of 24 Scienter under the FCA encompasses actual knowledge, deliberate indifference, and reckless disregard. Triple Canopy, 775 F.3d at 634. Although [m]alice, intent, knowledge, and other conditions of a person s mind may be alleged generally, Fed.R.Civ.P. 9(b), U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th Cir. 2008), courts routinely dismiss FCA claims for failure to allege sufficient facts to establish that a defendant knowingly engaged in fraudulent conduct. See Wilson, 525 F.3d at 379 (affirming dismissal of claim where the factual basis for [defendant s] purported intent at the time of allegedly fraudulent act was conduct that took place months afterwards ); U.S. ex rel. DeCesare v. Americare In Home Nursing, 757 F. Supp. 2d 573, 583 (E.D. Va. 2010) (dismissing FCA claim where complaint failed to allege facts showing that defendant knowingly submitted false certifications to Medicare). DeCesare, which involved allegations that the defendants had participated in a home health care referral kickback scheme in violation of the FCA, is particularly instructive. In analyzing whether the relator had sufficiently pled scienter, the DeCesare court acknowledged that although the complaint repeatedly stated that defendants knowingly made false statements, nowhere did the Amended Complaint present facts showing [the defendants ] knowledge that its certifications falsely reported the absence of kickbacks. Id. (emphasis added). Consequently, the DeCesare court held that the amended complaint did not survive the defendant s motion to dismiss. As in DeCesare (and Wilson), the Complaint does not include a shred of factual detail or particularity about NCBH s alleged knowledge of any supposed wrongdoing. In 9

12 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 12 of 24 particular, the Complaint never alleges any specific facts that would support or make plausible an allegation that NCBH, at the time it submitted its Medicare Cost Reports (from 2000 to the present), acted with any scienter in presenting a (supposedly) false claim to the Government. For example, the Complaint fails to include any facts or details to support an allegation that NCBH had any actual knowledge that its Domestic Care charges (purportedly) constituted a related-party transaction or that Medicare (ostensibly) required those charges to be reduced to cost. Likewise, the Complaint never alleges any specific facts to support or make plausible an inference that NCBH, when submitting its Cost Reports, knew that those Reports contained false statements regarding Domestic Costs. For example, Vincoli never contends that he or anyone else voiced specific concerns to NCBH about the fraud that he now alleges is in the Medicare Cost Reports, 5 see U.S. ex rel. Drakeford v. Tuomey, 792 F.3d 364, 377 (4th Cir. 2015) ( [I]t is difficult to imagine any more probative and compelling evidence regarding [the defendant s] intent than the testimony of a lawyer [] who warned it about the legality of the contracts in question), or that he (or anyone) overheard conversations by NCBH agents about the alleged wrongdoing, see U.S. ex rel. Harrison v. Westinghouse Savannah River Co., 352 F.3d 908, 919 (4th Cir. 2003) 5 Vincoli vaguely alleges that he advised his supervisors of the false and fraudulent claims that [he] reasonably believed [NCBH] was making as a result of the structure of its employee healthcare benefit plan and contractual relationships with its 50% subsidiary MedCost Services. (ECF No. 62 at 109.) However, he makes no allegation in the Complaint that he voiced specific concerns to NCBH about the fraud that he now contends is in the Cost Reports. 10

13 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 13 of 24 (finding sufficient evidence of intent where an employee witnessed wrongdoing and had discussions with the defendant about it). The closest the Complaint comes to an allegation of scienter is its general allegation that NCBH, having knowledge of [its] undisclosed related-party transactions, knowingly and willfully concealed and failed to disclose those transactions with an intent fraudulently to secure Medicare payments. (ECF No. 62 at 65). That conclusory allegation, however, does not satisfy Vincoli s pleading burden. See U.S. ex. rel. Pilecki- Simko v. Chubb Inst., 443 Fed.Appx. 754 (3rd Cir. 2011) (holding that conclusory scienter allegations are insufficient to state a plausible FCA claim). U.S., ex rel. Modglin v. DJO Glob. Inc., 114 F. Supp. 3d 993, 1024 (C.D. Cal. 2015) (holding that allegations that defendants knew that they were falsely and/or fraudulently claiming reimbursement and knew [their devices] were being unlawfully sold for unapproved off-label cervical use were too conclusory to plead a plausible claim for relief ). IV. THE SECOND AMENDED COMPLAINT FAILS TO SATISFY THE PLEADING REQUIREMENTS OF RULE 9(B). A. FCA Claims Must Satisfy Rule 9(b). Because FCA complaints sound in fraud, they must meet the more stringent particularity requirement of Federal Rule of Civil Procedure 9(b). United States v. Triple Canopy, Inc., 775 F.3d 628, 634 (4th Cir. 2015). To satisfy Rule 9(b), the complaint must allege the who, what, when, where and how of the alleged fraud. U.S. ex. rel. Ahumada v. NISH, 756 F.3d 268, (4th Cir. 2014). This heightened pleading requirement serves two goals related to FCA claims: a) deterring fishing 11

14 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 14 of 24 expeditions Triple Canopy, 775 F.3d at 634; and b) eliminating those claims where all the facts are learned after discovery. Nathan, 707 F.3d at 455 (emphasis added). See also Ahumada, 756 F.3d at ( Requiring such particularized pleading [in FCA complaints] prevent[s] frivolous suits[,] eliminate[s] fraud actions in which all the facts are learned after discovery, and [] protect[s] defendants from harm to their goodwill and reputation ). In the instant case, Vincoli has failed to sufficiently plead both the who and the element of scienter to satisfy Rule 9(b) s requirements. B. The Complaint Fails to Allege the Identity of Any Person Who Participated in the Alleged Fraud. The Complaint fails to identify the who from NCBH that supposedly carried out the fraud. Rule 9(b) requires that an FCA plaintiff must, at a minimum, describe... the identity of the person making the misrepresentation. Triple Canopy, 775 F.3d at 634 (emphasis added). The Fourth Circuit routinely affirms dismissal of FCA claims for failure to satisfy this requirement. See, e.g., U.S. ex. rel. Godfrey v. KBR, Inc., 360 F. App x 407, 411 (4th Cir. 2010) (affirming dismissal of FCA complaint that failed to set forth the who, what, when, where, and how of the alleged fraud ); U.S. ex rel. Jones v. Collegiate Funding Servs., Inc., 469 F. App x 244, 259 (4th Cir. 2012) (affirming dismissal of an FCA claim that was utterly devoid of specifics, such as who at the defendant company engaged in the alleged fraud). Despite this lawsuit s almost seven year existence and Vincoli s supposed direct and independent knowledge of NCBH alleged wrongdoing, (ECF No. 62 at 8), the Complaint never names any specific NCBH agent or representative who was involved in 12

15 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 15 of 24 the alleged submission of fraudulent claims. Instead, it merely notes that NCBH s Cost Reports contained a certification by an [unnamed] officer. (Id. at 59). That vague allegation does not satisfy Rule 9(b) s particularity requirement. See e.g., U.S. ex rel. Robinson v. Northrop Corp., 149 F.R.D. 142, 145 (N.D. Ill. 1993) (holding that generic allegation that engineer or employees or superiors committed fraudulent acts was insufficient). In short, Vincoli s inability to identify the who in the purported fraud is fatal to his FCA Claim, and the same should be dismissed. C. Vincoli Cannot Plausibly Allege that He Has Firsthand Knowledge of Purported Fraudulent Acts. Vincoli s lack of personal knowledge about NCBH s alleged fraud further confirms that his FCA allegations lack the required indicia of reliability under Rule 9(b). U.S. ex. rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301 (11th Cir. 2002). See also U.S. ex rel. Nathan, 707 F.3d 451, 457 (4th Cir. 2013) ( Rule 9(b) requires that some indicia of reliability must be provided in the complaint ). Federal courts routinely require a relator to demonstrate first-hand knowledge about an alleged fraud in order to establish the required indicia of reliability. See, e.g., Cade, 2011 WL at *9 (dismissing complaint for fraudulent billing where nothing in the Complaint indicates with any reliability that [relator] would even know whether or not Defendants submitted any such claims.); U.S. ex. rel. Saldivar v. Fresenius Medical Care Holdings, Inc., 972 F. Supp. 2d 1317, 1335 (N.D. Ga. 2013) (denying motion to amend to add claims related to fraudulent billing for prescription over-fills where relator failed to allege any first-hand knowledge about recapturing and 13

16 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 16 of 24 subsequently billing for non-existent overfill sufficient to support the allegations in the proposed claims). Indeed, in U.S. ex. rel. Walterspiel v. Bayer A.G., No. 1:12CV773, 2014 WL , at *5 (M.D.N.C. Dec. 19, 2014), aff d at 2016 WL (4th Cir. Jan. 20, 2016) (per curiam), this Court dismissed an FCA claim where the plaintiff s vague [and] ambiguous allegations suggest[ed] a lack of actual knowledge [by the relator] regarding the [underlying] events. In doing so, the Court noted that, [a]llowing [the relator] to proceed to discovery on such allegations would defeat the purpose of Rule 9(b) and permit the relator to engage in an improper fishing expedition. Id. Like the relators in each of these cases, Vincoli lacks personal knowledge to anchor and add an indicia of reliability to his FCA allegations against the Hospitals. Although Vincoli claims that the Hospitals have knowingly turned in false Medicare Cost Reports each year from approximately 2000 to the present, he was never involved with the Hospitals preparation of those Cost Reports and he never alleges any personal knowledge about that preparation. To the contrary. Vincoli s short-lived NCBH job did not involve any participation with, knowledge about, discussions about, review of, or responsibility for NCBH s Cost Reports. (ECF No. 62 at 8); 6 Moreover, Vincoli has 6 During his brief NCBH employment (which only lasted from July 10, 2006 through October 2, 2007), Vincoli s job duties included performing analyses of competing and available health benefit plans other than NCBH s own plan. Id. (Emphasis added). 14

17 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 17 of 24 failed to show or explain how he might have any personal knowledge about NCBH s preparation of its Medicare Cost Reports after his October 2007 termination. Additionally, the Complaint makes clear that Vincoli did not even review NCBH s Cost Reports until after NCBH submitted those Reports to Medicare and they became publicly available. (See, e.g., id. at 27.) Because Vincoli lacks the requisite firsthand knowledge to make his allegations reliable, the Complaint fails to satisfy the requirements of Rule 9(b). V. THE COMPLAINT FAILS TO STATE ANY PLAUSIBLE RETALIATION CLAIM. The Complaint alleges that NCBH engaged in two distinct retaliatory acts against Vincoli, both of which occurred years after NCBH terminated him in First, he alleges that NCBH filed a lawsuit against him in state court in January (ECF No. 62 at 88.) Second, he alleges that in 2013, NCBH somehow caused the Governor of North Carolina to reclassify his DPS position as an exempt management position, and then caused the Governor to terminate that employment. (Id. at 99.) Neither claim provides an actionable basis for retaliation under the federal or state False Claims Acts. To state a claim for retaliation under 3730(h) of the FCA, a plaintiff must allege that (1) he engaged in protected activity, (2) the employer knew about the activity, and (3) the employer took adverse action against him as a result. U.S. ex rel. Smith v. Clark/Smoot/Russell, 796 F.3d 424, 433 (4th Cir. 2015). 7 The Complaint fails to establish 7 No North Carolina court appears to have stated the elements of a retaliation claim under of the North Carolina Fair Claims Act, but 1-616(c) provides that 15

18 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 18 of 24 the third element, as 3730(h) does not extend to post-employment acts of retaliation and the Complaint fails to establish a plausible nexus between NCBH s alleged knowledge of this litigation and the alleged adverse actions. A. Vincoli Cannot Assert Claims For Alleged Retaliatory Acts That Occurred After His NCBH Termination. Vincoli cannot assert a retaliation claim for actions that occurred years after his 2007 termination. The retaliation provision of the FCA prohibits retaliation against an employee in the terms and conditions of employment. See 31 U.S.C. 3730(h).8 Following the plain language of the statute, [t]he vast majority of courts to have considered the issue have found, most even at the motion to dismiss stage, that 3730(h) provides no remedy for retaliation alleged to have occurred following a plaintiff s termination of employment. Fitzsimmons v. Cardiology Associates of Fredericksburg, Ltd., 3:15CV72, 2015 WL , at *7 (E.D. Va. Aug. 18, 2015) (citing cases). See also U.S. ex rel. Head v. Kane Co., 798 F. Supp. 2d 186, 208 (D.D.C. 2011) ( The plain language of this phrase clearly establishes that Section 3730(h) applies only to the employment context and, therefore, cannot extend to claims for retaliatory action occurring solely after a plaintiff has been terminated from his job. ); Bechtel v. St. Joseph Med. Ctr., Inc., Civil Action No. MJG , 2012 WL , at *9 (D. Md. Apr. the act shall be interpreted and construed so as to be consistent with the federal False Claims Act, 31 U.S.C. 3729, et seq., and any subsequent amendments to that act. Accordingly, the elements should be the same. language. 8 Section of the North Carolina False Claims Act contains similar limiting 16

19 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 19 of 24 26, 2012) ( it appears that all courts considering the issue have held that 3730(h) does not provide a remedy for acts of retaliation subsequent to termination. ). 9 Although one federal court has held that an employee may assert a claim under 3730(h) against a former employer who allegedly interferes with the employee s subsequent employment opportunities, U.S. ex rel. Kent v. Aiello, 836 F. Supp. 720, 726 (E.D. Cal. 1993), that case is readily distinguishable. In reaching its decision, the Aiello court analogized to retaliation claims brought under Title VII of the Civil Rights Act of Id. As another court observed, however, unlike the FCA, the retaliation provisions of Title VII and the ADEA do not contain language limiting their scope to the employment context. Kane, 798 F. Supp. 2d at 208 n. 32. See also U.S. ex rel. Wright v. Cleo Wallace Centers, 132 F. Supp. 2d 913, 928 (D. Colo. 2000) (rejecting plaintiff s efforts to graft the law of Title VII retaliation onto the FCA. ) Accordingly, Aiello is contrary to both the plain language of the statute and the weight of authority. B. Even if Vincoli Can Sue for Post-Employment Acts, the Complaint Fails to Allege Plausible Retaliation Claims. 1. NCBH s 2011 Lawsuit against Vincoli Cannot Provide a Basis for a Retaliation Claim. The Complaint s reliance on the 2011 lawsuit as a purported retaliatory act under either the FCA or the North Carolina FCA fails for the following reasons: 9 In Glynn v. Impact Sci. & Tech., Inc., 807 F. Supp. 2d 391, 419 n. 23 (D. Md. 2011), the District of Maryland granted summary judgment to a defendant on the merits of a post-termination retaliation claim, but also found it worth noting that at least two district courts have found that FCA 3730(h) does not provide remedies for posttermination retaliation. 17

20 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 20 of 24 First, any 3730(h) claim based on the 2011 lawsuit is time-barred, as 3730(h)(3) imposes a three-year statute of limitations that begins to run as of the date of the alleged retaliatory act. Second, NCBH filed the lawsuit in January 2011 (Id., 88). This was, according to Vincoli s own Complaint, six months before Vincoli alleges that NCBH learned about this qui tam action in June of (See ECF No. 62 at 91.) As a matter of timing and logic, then, NCBH could not have filed the suit in retaliation for Vincoli bringing an FCA action of which it was not even aware. U.S. ex rel. Brown v. Aramark Corp., 591 F. Supp. 2d 68, 77 (D.D.C. 2008) ( Unless the employer is aware that the employee is investigating fraud,... the employer could not possess the retaliatory intent necessary to establish a violation of 3730(h) ). Third, even assuming that the 2011 NCBH lawsuit could qualify as a retaliatory act, the Complaint does not include any allegation that the lawsuit lacked a reasonable basis in fact or law. See Darveau v. Detecon, Inc., 515 F.3d 334, 341 (4th Cir. 2008) (holding that plaintiff in Fair Labor Standards Act case stated retaliation claim where it alleged that employer filed lawsuit with retaliatory motive and with no basis in law or fact). Rather, the Complaint alleges only that NCBH voluntarily dismissed its suit in October (ECF No. 62 at 92.) 2. The Complaint Does Not Plausibly Allege that NCBH Caused the Governor of North Carolina to Fire Vincoli. The Complaint s allegations regarding Vincoli s DPS termination amount to little more than an unsupported, implausible conspiracy theory for which he provides no 18

21 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 21 of 24 factual support and no connection with the allegations in this qui tam suit. The Complaint weaves an elaborate tale beginning in January 2013 with a State Property Incident Form, (ECF No. 62 at 93), and involves: communications with a state legislator regarding a claim which has never been part of this litigation about overpayments by the State Health Plan, (id. at 94), 10 accusations that DPS leadership violated state law, (id. at 95), and a claim that Governor McCrory s administration reclassified Mr. Vincoli s position in October 2013 and subsequently fired him in December (Id. at 98.) From those allegations, the Complaint then makes the entirely unsupported leap based solely on unspecified information and belief that the Governor s office took these punitive and discriminatory employments actions against Vincoli at the behest of NCBH. (Id. at 99.) The Complaint offers no factual details about how NCBH caused Vincoli to be terminated from DPS by the Governor s office. The Complaint s conclusory allegations bereft of any actual factual allegations linking Mr. Vincoli s termination by the State to NCBH are insufficient to state a retaliation claim. See U.S. ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 240 (1st Cir. 2004) (granting motion to dismiss retaliation claim where plaintiff failed to allege a factual predicate concrete enough to support his conclusory statement that he was retaliated against because of conduct protected under the FCA. ) (recognized as modified on other grounds by United States ex rel. Gagne v. City of Worcester, 565 F.3d 10 The Complaint acknowledges that claim was resolved by the State in September (ECF No. 62 at 90.) 19

22 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 22 of 24 40, 46 n. 7 (1st Cir.2009)). Moreover, the fact that the alleged retaliation occurred over six years after Mr. Vincoli s termination from NCBH and two-and-a-half years after NCBH allegedly learned of this suit precludes any inference of retaliation. See Shenoy v. Charlotte-Mecklenburg Hosp. Auth., 521 Fed. Appx. 168, 175, 2013 WL , at *7 (4th Cir. 2013) (holding that lapse of three years between notice of claim and termination was insufficient to support inference of retaliation). Simply put, the Complaint fails to allege any facts linking Vincoli s firing to NCBH, much less any facts linking his firing to NCBH s knowledge of this lawsuit. As a result, the Complaint fails to state retaliation claims against NCBH, and the Court therefore should dismiss those causes of action. CONCLUSION The Court should enforce the Release as to those claims pre-dating May The Court should reject Vincoli s attempt to make an end run around the pleading requirements of Rule 9(b) and dismiss the Complaint s FCA Claim against NCBH which fails to sufficiently or plausibility plead all requisite elements of that cause of action. Finally, the Court should dismiss the Retaliation Claims against NCBH, which, like the FCA Claim, fail to plausibly plead claims for relief against NCBH. Respectfully submitted, /s/ Brent F. Powell Philip J. Mohr, N.C. State Bar #24427 Brent F. Powell, N.C. State Bar #41938 WOMBLE CARLYLE SANDRIDGE & RICE, LLP One West Fourth Street Winston-Salem, NC Telephone: (336) Facsimile: (336)

23 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 23 of 24 Sandra L.W. Miller* WOMBLE CARLYLE SANDRIDGE & RICE, LLP 550 South Main Street Suite 400 Greenville, SC *Appearing pursuant to Local Rule 83.1(e) Attorneys for North Carolina Baptist Hospital 21

24 Case 1:09-cv UA-LPA Document 66 Filed 04/08/16 Page 24 of 24 CERTIFICATE OF SERVICE This to certify that on this the 8th day of April, 2016, I electronically filed the foregoing Defendant North Carolina Baptist Hospital s Motion to Dismiss Plaintiff s Second Amended Complaint with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following: Charles H. Rabon, Jr. Rabon Law Firm, PLLC 225 E. Worthington Avenue Suite 100 Charlotte, NC Telephone: Fax: Crabon@usfraudattorneys.com Marshall P. Walker Rabon Law Firm, PLLC 225 E. Worthington Avenue Suite 100 Charlotte, NC Telephone: Fax: mwalker@usfraudattorneys.com Wm. Paul Lawrence, II Waters & Kraus, LLP Mountville Road Middleburg, VA Telephone: Fax: plawrence@waterskraus.com Kay Gunderson Reeves Waters & Kraus, LLP 3219 McKinney Avenue Dallas, TX Telephone: Fax: kreeves@waterskraus.com /s/ Brent F. Powell Brent F. Powell, N.C. State Bar #41938 Attorney for North Carolina Baptist Hospital 22