On February 10, 2011, the United States District Court for the Eastern District of Virginia denied defendant MedStar Health Visiting Nurse Association’s (“MedStar”) motion to dismiss the relator’s second amended complaint, finding that the relator had pled sufficient facts to demonstrate scienter and shared intent to defraud the government for purposes of surviving dismissal. See United States ex rel. Decesare, et al. v. Americare In Home Nursing, et al., No. 1:05cv696, 2011 WL 607390 (E.D. Va Feb. 10, 2011). The relator alleged that MedStar and Americare paid kickbacks to a referral agency in exchange for referrals. The relator further alleged that MedStar and other defendants violated the False Claims Act, the Virginia Fraud Against Taxpayers Act, and the District of Columbia Procurement Reform Amendment Act in connection with certifications of Medicare and Medicaid cost reports that stated, among other things, they were not obtaining services procured through the payment of a kickback. The government declined to intervene in the action.

According to the second amended complaint, the relator, the owner of Professional Healthcare, Resources Inc. (“Professional Healthcare”), a home health care agency, attended a meeting regarding the formation of a referral network from the Virginia Hospital Center (“VHC”). Also present at the meeting were representatives from Americare, another home health care agency. During the meeting, a representative from VHC stated that the agencies at the meeting could expect to split 100 Medicare referrals per month, with each referral leading to a $3,000 Medicare reimbursement to each agency. In exchange, the referral network was to receive a 7% fee from the volume of referrals. The relator objected to the proposal at the meeting and declined to pay for referrals, but alleged that home health care agencies MedStar and Americare subsequently participated in the referral process. After Professional Healthcare was later denied participation in the referral process, the Chief Operating Officer of Professional Healthcare sent a letter to the participants of the referral network, including MedStar and Americare. The letter set forth Professional Healthcare’s position that the recipients were allegedly violating the law, and also responded to an alleged argument made by the referral network that it was operating under the “referral service” safe harbor. The referral network’s attorney sent a response to the letter, and copied MedStar and Americare on its response.

In its motion to dismiss the second amended complaint, MedStar argued that the relator failed to present facts supporting the necessary elements of scienter and that the relator also failed to present facts supporting an improper agreement involving MedStar necessary for the relator’s conspiracy claim. The court denied MedStar’s motion. The court focused on the second amended complaint’s allegations that Professional Healthcare sent three of MedStar’s executives a letter explaining how MedStar’s participation in the referral process may have been a violation of the Anti-Kickback statute. The court found that the letter plausibly supported MedStar’s reckless disregard for the possibility that its subsequent certifications were false. The court held that these facts were sufficient to survive the motion to dismiss. In addition, the court found that these facts, taken as true, also showed MedStar’s knowledge that it may have been participating in an illegal referral network, such that its continuing to do so afterwards constituted its assent to the other parties’ allegedly illegal agreement. The court therefore held that the relator’s conspiracy count survived dismissal and denied MedStar’s motion.

In its decision, the court also ruled on defendants Kathleen Ammirati and Mary Tatum’s motion to dismiss. Ammirati was CEO of Americare, one of the home health care agencies alleged to be participating in the referral process, and Tatum was Americare’s Director of Nursing. The second amended complaint contained no allegations of any actions by Ammirati or Tatum besides attending a meeting in which referrals were discussed, and no allegations regarding their control over Americare’s actions. The court noted that simply alleging that a person was the CEO of a company that acted illegally is insufficient to support liability. Therefore, the court granted dismissal as to defendants Ammirati and Tatum.