United States v. Kindred Healthcare, Inc.

United States v. Kindred Healthcare, Inc.

Opinion

 [*373]  MEMORANDUM

TABLE OF CONTENTS

I. INTRODUCTION

II. BACKGROUND

A. Overview of the Medicare and Medicaid Systems

B. First Amended Complaint

C. Second Amended Complaint

III. LEGAL STANDARDS

A. Rule 12(b)(1)

B. Rule 12(b)(6)

C. Rule 9(b)

IV. DISCUSSION

A. Applicable Law

B. Staffing Requirements

i. Materiality

ii. Scienter

iii. Public Disclosure Bar

a. Pre-March 23, [**3]  2010 Public Disclosure Bar

1. Relator's Allegations

2. Original Source

b. Post-March 23, 2010 Public Disclosure Bar

1. Relator's Allegations

2. Original Source

C. Government Funding

i. Falsity

ii. Materiality

D. Form 1500s

E. MDS Forms and Rule 9(b)

F. State Claims

i. RUG States

ii. California, Tennessee, and Connecticut

iii. Other States and Rule 9(b)

V. CONCLUSION

I. INTRODUCTION

This is a qui tam action brought on behalf of the United States under the False Claims Act ("FCA") and on behalf of California, Colorado, Connecticut, Georgia, Indiana, Montana, Nevada, North Carolina, Tennessee, Washington, Wisconsin, Massachusetts, and Virginia under their analogous false claims laws¹ by relator,  [*374]  Timothy Sirls, against defendants Kindred Healthcare, Inc.; Kindred Healthcare Operating, Inc.; Kindred Healthcare Services, Inc.; Kindred Nursing Centers East, LLC; Kindred Nursing Centers West, LLC; Kindred Nursing Centers South, LLC; and Kindred Nursing Centers North, LLC. Presently before the Court is defendants' Motion to Dismiss relator's Second Amended Complaint ("SAC"). For the reasons set forth below, defendants' Motion is granted in part and denied in part.

II. BACKGROUND

The facts of this case are summarized [**4]  in detail in the Court's Memorandum dated June 29, 2020 (Document No. 60) ("Memorandum Addressing Defendants' First Motion to Dismiss"). They are recited in this Memorandum only as necessary to address the pending Motion.²

Relator Timothy Sirls worked as the Director of Nursing Services at Heritage Manor Healthcare Center in Mayfield, Kentucky, between April 2014 and June 2014. Second Amended Complaint ("SAC") ¶ 7. Heritage Manor is a nursing facility that was operated by Kindred Nursing Centers, LP from November of 2005 to December of 2015. SAC Ex. 1. Kindred Nursing Centers, LP is one of several wholly-owned subsidiaries through which defendant Kindred Healthcare, Inc. operated a network of nursing facilities around the country. SAC 1 n.1, ¶¶ 20-21. Kindred Healthcare, Inc. is a healthcare services conglomerate that operates through its subsidiary companies in 46 states and Puerto Rico. Id. ¶ 20. Among those subsidiaries are defendants Kindred Nursing Centers East, LLC; Kindred Nursing Centers West, LLC; Kindred Nursing Centers North, LLC; and Kindred Nursing Centers South, LLC. Id. ¶ 25. These entities owned and operated nursing facilities identified by relator in exhibits attached [**5]  to the SAC. SAC Exs. 1, 2. Each of these entities were owned by defendant Kindred Healthcare Operating, Inc., which itself is a subsidiary of Kindred Healthcare, Inc. Id. ¶¶ 20-21, 25-28.

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