Joint Reply Brief in Support of Motion to Dismiss — Integra Med Analytics v. Baylor Scott & White Health

Summary

Joint Reply Brief in Support of Joint Motion to Dismiss Relator's Second Amended Complaint, filed December 21, 2018 as Document 24 in United States of America ex rel. Integra Med Analytics LLC v. Baylor Scott & White Health, et al., Case No. 17-CV-0886-DAE, U.S. District Court for the Western District of Texas, San Antonio Division. Defendants argue that every specific pleaded fact is sourced from publicly disclosed information, that Relator pleads no instance of fraud or scheme under Rule 9(b), and that Relator is not an original source so the public disclosure bar applies. The brief asks the Court to dismiss the Second Amended Complaint with prejudice and requests an oral hearing. The brief is signed /s/ R. Jeffrey Layne and is 16 pages.

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“Joint Reply Brief in Support of Motion to Dismiss — Integra Med Analytics v. Baylor Scott & White Health.” Original at ecf.txwd.uscourts.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-5-17-cv-00886-dkt-24-w-d-tex-28ffe0d1a8/, SHA-256 fb9cf14376d4e4a85d4f6bdbd8f1850cba2a97379f33a6c6145b85ca3b8c903b.

Full text

Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 1 of 16

R. Jeffrey Layne (TX Bar No. 00791083)
jlayne@reedsmith.com
Benjamin Koplin (TX Bar No. 24055792)
bkoplin@reedsmith.com
Megan Alter Hudgeons (TX Bar No. 24001645)
mhudgeons@reedsmith.com
Reed Smith LLP
111 Congress Ave., Suite 400
Austin, TX 78701
T: 512.623.1821
F: 512.623.1802

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION

UNITED STATES OF AMERICA,
ex rel. INTEGRA MED ANALYTICS LLC,
Case No.: 17-CV-0886-DAE
Plaintiff,

1. BAYLOR SCOTT & WHITE HEALTH,
2. BAYLOR UNIVERSITY MEDICAL CENTER –
DALLAS,
3. HILLCREST BAPTIST MEDICAL CENTER,
4. SCOTT & WHITE HOSPITAL – ROUND ROCK,
5. SCOTT & WHITE MEMORIAL HOSPITAL –
TEMPLE,

Defendants.

DEFENDANTS BAYLOR SCOTT & WHITE HEALTH, BAYLOR UNIVERSITY
MEDICAL CENTER—DALLAS, HILLCREST BAPTIST MEDICAL CENTER, SCOTT
& WHITE HOSPITAL—ROUND ROCK, AND SCOTT & WHITE MEMORIAL
HOSPITAL—TEMPLE’S JOINT REPLY BRIEF IN SUPPORT OF THEIR JOINT
MOTION TO DISMISS RELATOR’S SECOND AMENDED COMPLAINT
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 2 of 16

TABLE OF CONTENTS

I. INTRODUCTION .............................................................................................................. 1

II. ARGUMENT ...................................................................................................................... 2

A. Every Specific Well-Pleaded Fact is Benign and Sourced from Publicly Disclosed
Information ....................................................................................................................... 2

B. Relator Pleads No Instance of Fraud, No Scheme to Commit Fraud, and No Claim
Affected by Fraudulent Acts per Rule 9(b)....................................................................... 7

C. Relator Are Not an “Original Source;” They Plead No Specific Facts and the
Public Disclosure Bar Applies .......................................................................................... 9

III. CONCLUSION AND REQUEST FOR ORAL HEARING ............................................ 10

i
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 3 of 16

TABLE OF AUTHORITIES

Cases

Cinel v. Connick, 15 F.3d 1338, 1343 n. 6 (5th Cir.1994) .............................................................. 7

Graham County Soil and Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280,
290 (2010) ................................................................................................................................... 3

Green v. Amerisourcebergen Corp., et al., 2017 WL 1209909 (S.D. Tex. Mar. 31, 2017) ........... 3

Health Choice Grp., LLC v. Bayer Corp., No. 5:17-CV-126-RWS-CMC (E.D. Tex.).............. 1, 9

Prewitt v. Continental Automotive, 927 F. Supp. 2d 435, 447 (W.D. Tex.) (Ezra, J.) ................... 7

Rangel v. Case & Assocs. Properties, Inc., 2018 WL 3420825, at *2 (W.D. Tex. July 12, 2018) 7

Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401, 411 (2011)............................... 3, 4, 5

Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 649 (D.C. Cir. 1994) ................................... 6

Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) ........................................ 7

U.S. ex rel. Ambrosecchia v. Paddock Labs., LLC, 2015 WL 5605281, at *5 (E.D. Mo. Sept. 23,
2015), aff’d, U.S. ex rel. Ambrosecchia v. Paddock Labs., LLC, 855 F.3d 949 (8th Cir. 2017) 5

U.S. ex rel. Conrad v. Abbott Labs., Inc., 2013 WL 682740, at *5 (D. Mass. Feb. 25, 2013) ....... 5

U.S. ex rel. Grubbs v. Kanneganti, 565 F. 3d 180, 190-91 (5th Cir. 2009) .................................... 9

U.S. ex rel. Heath v. Wisconsin Bell, 760 F.3d 688, 691 (7th Cir. 2014) ....................................... 6

U.S. ex rel. Integra Med Analytics LLC v. Providence Health Services et al., No. 2:17-CV-
01694-PSG-SS (C.D. Cal.) ..................................................................................................... 1, 7

U.S. ex rel. Integra Med Analytics, LLC v. Signature Healthcare, LLC, No: 3:17-cv-01544 (M.D.
Tenn.) .......................................................................................................................................... 1

U.S. ex rel. Lam v. Tenet Healthcare Corp., 481 F. Supp. 2d 673, 688 (W.D. Tex. 2006) ........ 6, 7

U.S. ex rel. Spay v. CVS Caremark Corp., 913 F. Supp. 2d 125, 182 (E.D. Pa. 2012) .................. 5

U.S. ex rel. Winkelman v. CVS Caremark Corporation, 118 F. Supp. 3d 412, 423 (D. Mass.
2015) ......................................................................................................................................... 10

Statutes

31 U.S.C. § 3730(e)(4)(A) .......................................................................................................... 3, 6

31 U.S.C. § 3730(e)(4)(B) .......................................................................................................... 7, 9

ii
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 4 of 16

Other Authorities

AHIMA, “Who We are,” available at https://goo.gl/Ec593n ......................................................... 7

Department of Health and Human Services, Agency for Healthcare Research and Quality
(“AHRQ”), “AHRQ Quality Indicators Toolkit,” available at
https://www.ahrq.gov/sites/default/files/wysiwyg/professionals/systems/hospital/qitoolkit/b4-
documentationcoding.pdf ........................................................................................................... 7

Department of Health and Human Services, Centers for Medicare & Medicaid Services,
“Instructions for Completing the Limited Data Set Data Use Agreement,” Form No. CMS R-
0235L, available at https://goo.gl/HJMiro ............................................................................. 4, 5

Department of Health and Human Services, Centers for Medicare & Medicaid Services,
“Limited Data Set (LDS) Files - Centers for Medicare & Medicaid Services,” available at
https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/Data-
Disclosures-Data-Agreements/DUA_-_NewLDS.html .............................................................. 4

Sue Prophet, Coding Compliance: Practical Strategies for Success, Journal of AHIMA, vol. 69,
no.1 (1998), 50-61 ...................................................................................................................... 8

Rules

Fed R. Civ. P. 12(b)(6).................................................................................................................... 7

Fed. R. Civ. P. 8(a) ......................................................................................................................... 9

Fed. R. Civ. P. 9(b) ............................................................................................................. 1, 2, 6, 9

Regulations

FY 2008 IPPS Final Rule, 72 Fed Reg. at 47,182 (August 22, 2007) ........................................ 7, 8

iii
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 5 of 16

I. INTRODUCTION

Relator says Defendants’ Motion to Dismiss (Dkt. 21, “MTD”) is “a strawman attack on a

counterfactual version of the Complaint.” Dkt. 23 at 1 (“Opp’n”). They say their Second Amended

Complaint (Dkt. 15, “SAC”) is “extensive[ly] detail[ed]” and ought to survive Defendant’s MTD.

Opp’n at 1, 2. Defendants obviously disagree, and the law is squarely on our side.1

As demonstrated below and in the attached, Relator sourced every single pleaded fact from

publicly-disclosed and publicly-available information – LinkedIn, CMS, the census bureau, and

Defendants’ own website. Relator recasts these benign facts as nefarious through unsupported

assertions and bald conclusory statements. None of this comes close to meeting Federal Rule of

Civil Procedure 9(b) ’s requirement to plead the actual fraud of which Relator accuses Defendants

(misdiagnosis by a physician, miscoding by a coder, provision of medically unnecessary

treatment), nor a scheme to commit any such fraud.

A third amendment to the complaint could not possibly cure this deficiency. The second

amendment reflects the sum-total of “information gleaned from Integra’s comprehensive

1
Recently, the Department of Justice filed motions to dismiss eleven qui tam actions strikingly
similar to this action. In those cases, a “big-data entrepreneur” formed a group of “shell company
relators” and filed “essentially cloned complaints” to exploit CMS’s vast amount of public data
as a “massive business opportunity.” Mot. to Dismiss Second Am. Compl., Health Choice Grp.,
LLC v. Bayer Corp., No. 5:17-CV-126-RWS-CMC (E.D. Tex.), Dkt. 116 at 2-3, 5 (emphasis
added) (internal citations omitted).

Relator is a member of an analogous group of “associated compan[ies]” established for the sole
purpose of leveraging “statistic[s]” to file qui tam actions across various industry sectors. SAC ¶
11. Relator specializes in bringing carbon-copy complaints against hospital systems and other
healthcare providers about which they have no inside information, always relying on their
“proprietary methodology” for analyzing publicly-disclosed data to “prove” fraud. Compare
SAC with Second Am. Compl., U.S. ex rel. Integra Med Analytics LLC v. Providence Health
Services et al., No. 2:17-CV-01694-PSG-SS (C.D. Cal.); compare SAC with Orig. Comp., U.S.
ex rel. Integra Med Analytics, LLC v. Signature Healthcare, LLC, No: 3:17-cv-01544 (M.D.
Tenn.).

1
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 6 of 16

investigation [of ‘non-public internal documents, [and] interviews with former employees’].”

Opp’n at 12. The facts, where they are specific and relate to Defendants’ CDI, are all publicly

disclosed. Opp’n at 12. Elsewhere the “facts” are utterly vague, nonspecific, and innocuous (e.g.,

conversations with an unnamed “former medical coder” regarding unspecified “directives to code

a certain way” (SAC ¶ 22)). None of this is surprising. Apart from Relator’s serial FCA litigation

against healthcare providers (wherein they continually emphasize “proprietary analyses” of

publicly-disclosed CMS data, see, supra, FN 1), Relator is an outsider that pleads no connection

to any of the Defendants2 or the healthcare industry. Relator thus resorts to sweeping allegations

derived entirely from publicly-disclosed information and unmoored from the specific factual

pleading Rule 9(b) requires.3

Opinions4 of and quotations from publicly-disclosed data and documents, apart from being

clearly barred for public disclosure, cannot be the sole grounds supporting a qui tam relator’s FCA

action. The Fifth Circuit’s Rule 9(b) pleading standard requires specific factual pleading of at least

the “who, what, when, where, how” of a scheme to commit fraud, and Relator has (essentially)

pleaded only that Defendants have a CDI program, that they submit claims to Medicare, and that

the claims are coded with CCs and MCCs. The Court should dismiss Relator’s SAC with prejudice.

II. ARGUMENT

A. Every Specific Well-Pleaded Fact is Benign and Sourced from Publicly
Disclosed Information

The FCA’s public disclosure bar applies when there has been a public disclosure of

2
In fact, they plead the opposite: “Relator uncovered Baylor’s fraud by employing unique
algorithms and statistical processes.” SAC ¶ 40.
3
For example, they say Defendants’ CDI program differs from other hospitals’ CDI programs,
but fail to explain how Defendants’ program departs in any way from long-established clinical
documentation guidance published or endorsed by the federal Medicare agency.
4
Even opinions described as “astounding,” Opp’n at 8, or as “proprietary analysis,” SAC ¶ 1, are
still opinions.
2
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 7 of 16

substantially the same allegations or transactions alleged in an FCA complaint. 31 U.S.C. §

3730(e)(4)(A). The Supreme Court has consistently affirmed the wide reach of the bar: when an

agency responds to a request for information, the response is a “report,” the report is publicly

disclosed. Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401, 411 (2011); Graham County

Soil and Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280, 290 (2010) (noting

the “broad[] sweep” of the FCA’s public disclosure bar).

When information is published on a website that is readily accessible, the information is

likewise publicly disclosed under the bar. “Courts have unanimously interpreted the term ‘public

disclosure’ to include websites and online articles.” Green v. Amerisourcebergen Corp., et al.,

2017 WL 1209909 (S.D. Tex. Mar. 31, 2017) (citing Graham County, 559 U.S. at 290; Schindler,

563 U.S. at 408). Even as Relator urges this court to give extra weight to “its ‘independent

investigation and analysis’ of information pulled from numerous sources” (Opp’n at 12) in an

attempt to avoid the bar, the “numerous sources” themselves each trigger the bar: CMS data;

LinkedIn;5 presentations6 and other documents7 published on readily accessible websites; and

documents published on Defendants’ own public-facing website.8

Regarding the publicly-disclosed CMS claims data, Relator asks this Court to create a new

exception to the bar by finding that a public disclosure is not a public disclosure if the recipient

5
SAC ¶ 20; publicly available at https://www.linkedin.com/in/anthony-tony-matejicka-b9b3415a
(Exh. A)
6
SAC ¶¶ 24-26; Opp’n at 4-5; publicly available at http://g.tinyurl.com/y7p6sk38 (Exh. B)
7
SAC ¶ 29; publicly available at https://acdis.org/system/files/resources/280688.pdf (Exh. C)
8
SAC ¶¶ 26, 28, 30, 31, 32, publicly available at
http://www.sw.org/misc/physicianresources/pdf/TealNotes/Tealquickies.pdf (Exh. D);
http://www.sw.org/misc/physicianresources/pdf/TealNotes/03_AlteredMentalStatus.pdf (Exh.
E);
http://www.sw.org/misc/physicianresources/pdf/TealNotes/35_RespiratoryFailure.pdf (Exh. F);
http://www.sw.org/misc/physicianresources/pdf/TealNotes/12_MedicalComorbidities.pdf (Exh.
G);
http://www.sw.org/misc/physicianresources/pdf/PlasticSurgery/PlasticSurg_ProgressNote.pdf
(Exh. H)
3
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 8 of 16

member of the public promises to “protect” some aspect of the disclosure. Opp’n at 11 (emphasis

in original). Such an exception would subvert binding Supreme Court precedent and is not

supported by the statute. In Schindler, the Supreme Court clearly held that when the government

prepares and produces a “report” in response to a request for information, the “report” and its

attachments are publicly disclosed for purposes of the FCA. Id. at 416. The Schindler court found

the information publicly disclosed not because FOIA required such an outcome, but because the

responding agency gave the requestor “something that gives information,” a “notification,” and an

“official or formal statement of facts.” Schindler, 563 U.S. at 411. Relator responds by saying that

CMS’s “Instructions for Completing the Limited Data Set Data Use Agreement,” which requires

that disclosure recipients redact certain beneficiary health information prior to broader publication,

frees the disclosure from the bar. Opp’n at 10. This is not so.

Relator urges this Court to find the instant CMS report not a publicly-disclosed report

because CMS requires Relator to not further disclose information identifying Medicare

beneficiaries.9 Opp’n at 11. No cases support such an outcome. The CMS request-review-response

process10 is nearly identical to the process Schindler describes.11 Schindler makes clear that the

9
We would also mention that the CMS Instructions require Relator to certify itself as a
researcher focused on benefitting Medicare beneficiaries in order to obtain the data at issue.
Opp’n at 10. Relator is far from an altruistic researcher. See, supra, FN 1 and accompanying text.
10
Requestor (in this case, Relator) requests a defined dataset and describes its intended use;
CMS evaluates the purpose for the request and makes a determination; CMS notifies the
requestor of the outcome and discloses (or does not disclose) the data. See Opp’n at 10, citing to
CMS, “Instructions for Completing the Limited Data Set Data Use Agreement,” Form No. CMS
R-0235L, available at https://goo.gl/HJMiro)); see Schindler at 1893 (discussing various request-
response processes that result in public disclosure); see Department of Health and Human
Services, Centers for Medicare & Medicaid Services, “Limited Data Set (LDS) Files - Centers
for Medicare & Medicaid Services,” available at https://www.cms.gov/Research-Statistics-Data-
and-Systems/Files-for-Order/Data-Disclosures-Data-Agreements/DUA_-_NewLDS.html.
11
Requestor (in this case, Relator) requests a defined dataset and describes its intended use;
CMS evaluates the purpose for the request and makes a determination; CMS notifies the
requestor of the outcome and discloses (or does not disclose) the data. See Opp’n at 10, citing to
Department of Health and Human Services, Centers for Medicare & Medicaid Services,

4
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 9 of 16

actions of the reporting agency (review, notify, disclose) and not the requestor trigger the bar. A

request-response process produces a “report,” and Schindler (considering the bar in the context of

a FOIA request-and-response) says the “report” and “any records the agency produces along with

its written FOIA response are part of that response . . . and disclosed ‘in’ a report for the purposes

of the public disclosure bar.” Schindler, 563 U.S. at 411 (emphasis added). Relator says their

promise to protect beneficiary-identifying information in the CMS-disclosed data excises the entire

CMS report from the purview of the bar; no cases support that proposition, and nothing in the SAC

relies on the protected information.12

Relator also says the type of data CMS disclosed cannot trigger the bar, because they cannot

identify any cases holding that such data can be “publicly disclosed.” That is not the standard. And

to that point, several courts have held that “CMS data files” are qualifying public sources under

the FCA’s public disclosure bar. U.S. ex rel. Ambrosecchia v. Paddock Labs., LLC, 2015 WL

5605281, at *5 (E.D. Mo. Sept. 23, 2015), aff’d, U.S. ex rel. Ambrosecchia v. Paddock Labs., LLC,

855 F.3d 949 (8th Cir. 2017); U.S. ex rel. Conrad v. Abbott Labs., Inc., 2013 WL 682740, at *5

(D. Mass. Feb. 25, 2013). Each of these cases focused on CMS’s disclosure of the data, not on

whether any of the data may have contained protected information. The “raw CMS data” disclosed

to, and relied upon, by Relator in this qui tam falls squarely under the FCA’s public disclosure bar.

Opp’n at 2.

“Instructions for Completing the Limited Data Set Data Use Agreement,” Form No. CMS R-
0235L, available at https://goo.gl/HJMiro)); see Schindler, 563 U.S. at 411, 416 (discussing
various request-response processes that result in public disclosure); see “Limited Data Set (LDS)
Files - Centers for Medicare & Medicaid Services.”
12
Spay does not support Relator’s argument that the data at issue was not publicly disclosed. See
Opp’n at 10-11; U.S. ex rel. Spay v. CVS Caremark Corp., 913 F. Supp. 2d 125, 182 (E.D. Pa.
2012). The Spay defendant argued that its own “submissions” to the government were public
disclosures implicating the bar; the Spay court disagreed. Id. (emphasis added). The question of a
defendant’s own disclosure to the government, however, is inapposite to the instant matter. Id. at
184. We argue that CMS’s report to Relator was a public disclosure. Schindler is clear: an
agency “report” in response to a request triggers the bar.
5
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 10 of 16

Relator’s “analysis” is simply opinions re the very transactions CMS disclosed in its report

(in addition to publicly-available – and thus publicly-disclosed – census data), and nothing more,

satisfying the requirement that the disclosure was a disclosure of substantially the same allegations

or transactions alleged in an FCA complaint. 31 U.S.C. § 3730(e)(4)(A). That Relator formed and

pleaded opinions regarding the data does not lessen the data’s status as the very data that forms

Relator’s SAC. Relator claims their “exhaustive investigation” (SAC ¶ 4) clears the bar and

uncovers “a system-wide scheme to code unwarranted MCCs.”13 Opp’n at 16. Yet their

“investigation” sources only publicly-available information that is nonetheless innocuous. See,

supra, FN. 5 through 8.

No part of Relator’s “analysis” or “investigation” escapes the public disclosure bar.

Regardless, their “investigation” results are also fatally vague and benign. The only “astounding”

results are Relator’s conclusions drawn from the benign publicly-available and disclosed

information upon which they construct their case. See Opp’n at 8. Relator identifies not a single

instance of coding or diagnosing – let alone false coding or false diagnosing, or a scheme to

commit same. In this way, the Rule 9(b) pleading deficiency undermines Relator’s claim to be an

original source. This parasitic Relator is an outsider who cannot possibly “materially add[] to the

publicly disclosed . . . transactions [with ‘independent’ facts],” because he has no independent

13
The Heath case is unhelpful to Relator’s argument. The Heath relator undertook an
independent investigation that uncovered fraud while he was an insider hired by the defrauded
parties to audit their telecom pricing structures; his investigation uncovered the fraud “prior to
[his] discovery” of any publicly available information. U.S. ex rel. Heath v. Wisconsin Bell, 760
F.3d 688, 691 (7th Cir. 2014). Springfield and Lam, also brought by whistleblowing “insiders”
with independent, non-public insider information to supplement the publicly disclosed sources,
are similarly unhelpful. Springfield Terminal Ry. Co. v. Quinn, 14 F.3d 645, 649 (D.C. Cir.
1994) (railroad company and its president were directly involved in arbitration proceedings that
defendant presided over); U.S. ex rel. Lam v. Tenet Healthcare Corp., 481 F. Supp. 2d 673, 688
(W.D. Tex. 2006) (physician relators maintained privileges and held directorships at defendant’s
hospitalsand aaa).

6
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 11 of 16

facts to add. 31 U.S.C. § 3730(e)(4)(B).

B. Relator Pleads No Instance of Fraud, No Scheme to Commit Fraud, and No
Claim Affected by Fraudulent Acts per Rule 9(b)

Relator says that “most hospital groups . . . have a system-wide clinical documentation

improvement (“CDI”) program,” and that “[t]hese programs are usually designed to promote

accurate documentation and coding of a patient’s diagnosis.” Opp’n at 3 (citing SAC ¶ 20). Relator

elsewhere cites to CMS and industry group guidelines for how CDI programs ought to be designed

and operate.14 When making similar allegations against a different hospital system, Relator

criticized those defendants for downplaying the importance of one particular industry group,

AHIMA. 15 Relator considers AHIMA a “preeminent” authority on CDI programs, writing “CMS

cites AHIMA as authority for positions it takes on CDI.” Id. Defendants do not argue that AHIMA

is (or is not) such an authority;16 instead, we note Relator’s oft-stated position because Relator is

14
In ruling on a Rule 12(b)(6) motion to dismiss, this Court “must consider . . . documents
incorporated into the complaint by reference, and matters of which a court may take judicial
notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007) (citations
omitted). A court may take judicial notice of a document that is a “matter of public record when
deciding a Rule 12(b)(6) motion.” Prewitt v. Continental Automotive, 927 F. Supp. 2d 435, 447
(W.D. Tex.) (Ezra, J.) (citing Cinel v. Connick, 15 F.3d 1338, 1343 n. 6 (5th Cir.1994)).
“Publicly available court documents filed in a” federal court are matters of public record. Rangel
v. Case & Assocs. Properties, Inc., 2018 WL 3420825, at *2 (W.D. Tex. July 12, 2018); see also
Lam, 481 F. Supp. 2d at 680. We ask this court to take judicial notice of Relator’s Response in
Opposition to Providence Health’s Motion to Dismiss. See, infra, FN 15.
15
Mem. in Opp’n to Mot. to Dismiss, U.S. ex rel. Integra Med Analytics LLC v. Providence
Health Services et al., No. 2:17-CV-01694-PSG-SS (C.D. Cal.), Dkt. 61 at n. 3, citing AHIMA,
“Who We are,” https://goo.gl/Ec593n; see FY 2008 IPPS Final Rule, 72 Fed Reg. at 47,182
(August 22, 2007).
16
We do not, however, dispute that both CMS and other federal agencies consider AHIMA an
authoritative voice on CDI programs. See FY 2008 IPPS Final Rule, 72 Fed Reg. at 47,182
(favorably discussing an AHIMA “article describe[ing] a program at a hospital utilizing clinical
documentation specialists that work on the hospital treatment floors . . . that [after] one year . . .
gained an additional $1.5 million in reimbursement”); see also Department of Health and Human
Services, Agency for Healthcare Research and Quality (“AHRQ”), “AHRQ Quality Indicators
Toolkit,” available at
https://www.ahrq.gov/sites/default/files/wysiwyg/professionals/systems/hospital/qitoolkit/b4-
documentationcoding.pdf (citing to AHIMA’s 2010 “Developing a coding compliance policy

7
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 12 of 16

curiously silent on what those “authoritative” CDI standards are, and how Defendant’s CDI

operations diverge from them in any way.

Indeed, if CMS “do[es] not believe there is anything inappropriate, unethical or otherwise

wrong with hospitals taking full advantage of coding opportunities to maximize Medicare payment

that is supported by documentation in the medical record,”17 then surely Relator’s factual pleading

would provide far more specificity (or any specificity at all) to show how Defendants’ CDI was

uniquely unethical and fraudulent.

Relator does nothing of the sort. For example, Relator says CDI programs “promote the

accurate documentation of a patient’s diagnoses and treatments such that they can be properly

coded for reimbursement.” SAC ¶ 20. CMS and AHIMA, Relator’s authoritative sources on CDI,

anticipate the needs for physician and coder training on key words and phrases that trigger audits

and payment, and repeated targeted queries to clarify ambiguities in the treatment record. See, e.g.,

Sue Prophet, Coding Compliance: Practical Strategies for Success, Journal of AHIMA, vol. 69,

no.1 (1998), 50-61. Relator never pleads specific facts showing that Defendants’ training and

queries are anything more than those necessary to address the practical realities of a CDI program

contemplated by CMS and AHIMA. Instead they provide anonymous, vague quotes (Opp’n at 4),

and paste misleading snippets of publicly-available CDI program documents that they describe as

“aggressive[]” (Opp’n at 4) or constituting “pressure [to] diagnose something that did not call for

a CC or MCC.” (Opp’n at 5). The “‘beta through psi’ of Integra’s case” is a meaningless jumble

of naked conclusory statements. Opp’n at 12.

Even when Relator accuses Defendants of providing “medically unnecessary treatment”

simply to support false MCC codes, they plead no specific facts. SAC ¶¶ 37-39; Opp’n at 6. Their

document” publication as “a useful guide for developing hospital documentation and coding
policy.”)
17
72 Fed Reg. at 47,180.
8
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 13 of 16

sole support for the accusation is their observation that the incidence of certain MCCs exceeds a

“national average” – an “excess” apparently attributable to fraud simply because it cannot be

attributed to “chance.” Opp’n at 6, 19. This is an incredible accusation – a systemic fraud that

would require a vast and intentional conspiracy. Yet they plead no specific facts in support. They

make an impermissible inference neither Rule 9(b) nor Rule 8(a) allows, and level exactly the sort

of unsubstantiated smear that Rule 9(b) prohibits. U.S. ex rel. Grubbs v. Kanneganti, 565 F. 3d

180, 190-91 (5th Cir. 2009).18

C. Relator Are Not an “Original Source;” They Plead No Specific Facts and
the Public Disclosure Bar Applies

The above-cited Rule 9(b) pleading deficiencies highlight the fact Relator is not an

“original source” under the FCA. An “original source” has “knowledge that is independent of and

materially adds to” public disclosures. 31 U.S.C. § 3730(e)(4)(B). But Relator is an outsider. They

offer no inside information, no specific and independent knowledge that materially adds to what

they scraped from the internet and/or received from CMS.

They object, pointing to the “astounding” results of their analysis. Opp’n at 8. If this Court

were to hold that statistical analyses like theirs are well-pleaded facts, it will be the first time in

American jurisprudence that such statistical analyses are held to be anything other than opinion

(opinions can be relevant, but they are not facts and they are subject to challenges). Relator has

an opinion of how one ought to interpret the publicly-disclosed CMS data. Opp’n at 19. They need

to bring independent information to overcome the public disclosure bar and they do not. See

Health Choice Grp., LLC v. Bayer Corp., 2018 WL 3637381, at *50 (“charts of publicly available

18
Contrary to Relator’s assertion (Opp’n at 17), Rule 9(b) applies to the FCA and is not a mere
notice pleading standard. U.S. ex rel. Grubbs v. Kanneganti, 565 F. 3d at 185. Rule 9(b) requires
that the fraud be pleaded with specific facts – whether the false claims themselves or a scheme to
submit them.

9
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 14 of 16

information regarding Medicare and Medicaid reimbursements do not remedy the disconnect

between the alleged underlying conduct and any actual false claims for reimbursement”).19

“Independent” facts cannot “depend on the public disclosure or . . . merely constitute[] . . .

an individual's unique expertise or training . . . .” U.S. ex rel. Winkelman v. CVS Caremark

Corporation, 118 F. Supp. 3d 412, 423 (D. Mass. 2015), aff’d, United States ex rel. Winkelman v.

CVS Caremark Corp., 827 F.3d 201 (1st Cir. 2016) (internal citations omitted). Yet Relators

ground the reliability of their entire SAC on their “extensive experience using statistical analysis

to detect and prove fraud,” SAC at ¶ 11, their “quantitative, statistical, and econometric analyses”

executed with “mathematical precision.” Opp’n at 14.

Relator’s pleadings support the inference that Defendants’ CDI program is similar in

nature, purpose and function to every other CDI program in the country. They offer no specific,

well-pleaded facts, and nothing Relator adds is independent of their supposed expertise.

Everything that is non-public is so vague as to exist only as opinion in Relator’s mind. This court

may only consider well-pleaded facts on a motion to dismiss, making Relator’s data analysis, its

reliability notwithstanding, insufficient to overcome the public disclosure bar or survive

dismissal.

III. CONCLUSION AND REQUEST FOR ORAL HEARING

Defendants’ motion to dismiss should be granted with prejudice. Pursuant to LR CV-7(h)

Defendants respectfully ask the Court to grant an oral hearing on their Motion to Dismiss.

19
See, supra, FN 1 and accompanying text.
10
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 15 of 16

Dated: December 21, 2018 Respectfully submitted,

/s/ R. Jeffrey Layne
R. Jeffrey Layne
Texas Bar No. 00791083
REED SMITH LLP
111 Congress Avenue, Suite 400
Austin, TX 78701
Tel: (512) 623-1821
Fax: (512) 623-1802
jlayne@reedsmith.com

Counsel for Defendants Baylor Scott & White
Health, Baylor University Medical Center –
Dallas, Hillcrest Baptist Medical Center,
Scott & White Hospital – Round Rock, and
Scott & White Memorial Hospital – Temple

CERTIFICATE OF SERVICE

Undersigned counsel hereby certifies that the following counsel of record were served

via the CM/ECF system of the United States District Court for the Western District of Texas on

December 21, 2018.

Jeremy H. Wells P. Jason Collins
Reid Collins and Tsai LLP Reid Collins & Tsai LLP
1301 S Capital of Texas Hwy 1301 S. Capital of Texas Hwy.
Suite C-300 Building C, Suite 300
Austin, TX 78746 Austin, TX 78746
512-647-6100 512-647-6100
Fax: 512-647-6129 Counsel for Relator
Email: jwells@rctlegal.com
Counsel for Relator

Scotty G. Arbuckle , III Erica Benites Giese
Reid Collins & Tsai LLP U.S. Attorney’s Office
1301 S Capital of Texas Hwy Bldg., Ste 300 601 NW Loop 410
Austin, TX 78746 Suite 600
512-647-6100 San Antonio, TX 78216
Fax: 512-647-6129 (210) 384-7150
Email: tarbuckle@rctlegal.com Fax: (210) 384-7118
Counsel for Relator Email: erica.giese@usdoj.gov
Counsel for the United States

11
Case 5:17-cv-00886-DAE Document 24 Filed 12/21/18 Page 16 of 16

Susan Leslie Strawn
United States Attorney’s Office
601 NW Loop 410 - Ste 600
San Antonio, TX 78216
(210) 384-7388
Fax: 210/384-7322
Email: susan.strawn@usdoj.gov
Counsel for the United States

/s/ R. Jeffrey Layne
R. Jeffrey Layne

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