The opinion of the court was delivered by: DENNIS CAVANAUGH, District Judge
This matter comes before the Court on Defendant Hackensack
University Medical Center, Defendant New Jersey Primary Care and
Defendant Center for Infectious Diseases individually filed
motions for summary judgment. Also before the Court is
Plaintiff/Relator Phil Hefner's cross-motion for partial summary
judgment on Counts One and Two of the Amended Complaint. No oral
argument was heard pursuant to Fed.R.Civ.P. 78. For the following
reasons Defendants' motions for summary judgment are granted.
Plaintiff's cross-motion for summary judgment is denied.
Plaintiff/Relator Phil Hefner ("Hefner" or "Relator") brought
this qui tam action under the False Claims Act (FCA),
31 U.S.C.A. § 3729-33 (1994, 2001 supp.), against Defendants
Hackensack University Medical Center ("HUMC"), Center for
Infectious Diseases, P.A. ("CID"), and North Jersey Primary Care Associates, P.A. ("NJPC"). The Complaint was
initially filed under seal in the U.S. District Court for the
District of Maryland in or about August/September, 2000. On
August 22, 2001, this case was transferred to the District Court
of New Jersey pursuant to 28 U.S.C. § 1404. Since that time, the
parties have filed amended pleadings and engaged in discovery,
all of which culminated in the filing of the instant motions.
In his First Amended Complaint, Hefner alleges that the
Defendants (1) submitted false claims under the Medicare program
and federal grants, (2) created false medical records in
connection with the presentation of claims to Medicare and
federal grants, and (3) engaged in a retaliatory dismissal of
Relator from his employment.
HUMC is a university-based medical center in Hackensack, New
Jersey. NJPC, also located in Hackensack, is a New Jersey
professional service corporation, organized by a licensed
physician who is employed by HUMC in an administrative capacity.
CID is the private practice of several physicians, including Dr.
Steven Sperber, also located in Hackensack. CID was incorporated
on March 21, 1997 and its Board of Directors include Dr. Steven
Sperber, Dr. Jerome Levine and Dr. Peter Gross. See Gorrell
Affidavit, Ex. D., CID Cert. of Incorporation. Sperber testified
at his deposition that CID performs the billing and pays the
expenses for work performed by Sperber in the CID office.
Payments received for Sperber's services rendered on behalf of
CID are assigned to CID, and CID does not assign those payments
to HUMC. Sperber does not have an office at HUMC. Sperber Dep.,
Pursuant to January 1998 Tenant Space Agreement, CID pays rent
to HUMC for space on the hospital campus to be used for medical
offices and related purposes. Pursuant to a January 1999 Amended
Tenant Space Lease, CID pays rent to HUMC in addition to certain
monthly operating expense charges. Additionally, under a certain licensing and
leasing agreement, CID pays HUMC an agreed annual amount in
consideration for using the support services of certain
administrative hospital personnel for the CID physicians' private
practice of medicine. Gorrell Affidavit, Ex. C.
On March 1, 1998, Dr. Sperber entered into an employment
agreement with NJPC. Through this agreement, Sperber treats
patients at HUMC's Infectious Disease Clinic ("the ID Clinic")
not in excess of 10 hours per week. Sperber is paid a fixed
hourly rate for those services. The Agreement provides that NJPC
shall bill for all services performed by Sperber under the
Agreement, and shall be entitled to all payment received for
those services. Gorrell Affid., Ex. C; Sperber Dep. 20:15-18,
22:1-4, 40:4-9; Capek Dep., 71:15-18.
HUMC operates a variety of programs for persons infected with
HIV, including hospice programs and medical clinics (HUMC Mov.
Brief at 5.) In 1994, HUMC entered into a Grant Agreement with
the City of Paterson, Department of Human Resources in accordance
with the Ryan White Comprehensive Emergency AIDS Resources
Emergency Act of 1990. (CID Mov. Brief at 15). This Grant
Agreement was commonly referred to as the Ryan White Grant ("the
Grant"). Beginning in 1995, HUMC received funding provided under
the Ryan White Grant to provide various health care services to
patients infected with HIV in certain clinics and outpatient
sites operated by HUMC, such as the ID Clinic. (Id.) The grant
was administrated by Nurse Mary Ann Collins ("Nurse Collins"), an
HUMC employee. (Id.) Dr. Sperber performed services in the ID
clinic pursuant to his employment with NJPC. (Def. HUMC Mov.
Brief at 7.) These services were covered under the Ryan White
The Grant Agreement provided for an annual payment which was
not to exceed an agreed upon amount which varied over the years
of its existence and which covered a variety of services (Id.) These services included social work services, home health
aids, housing, transportation and other emergency assistance.
(Id.) With regard to physician services, the Grant provided for
target service figures and estimated costs associated with such
services, as opposed to payment being based on a specific amount
for each clinic visit. (Id.)
One of the conditions of the Grant was that it not be used to
replace existing financial support for HIV-related services.
(Id. at 6.) In the Year 2000 Grant Agreement, section entitled
"Maintenance of Effort and Cost Principles", it provided "[f]unds
may not be used to provide items or services for which payment
has already been made or can reasonably be made a third-party
payer, including Medicaid, Medicare, and/or other State or local
entitlement programs, prepaid health plans, or private
insurance." (Jackson Cert. Ex. 8, 000372).
Nurse Collins was responsible for preparing monthly
reports/invoices of services for which reimbursement was sought
from the Grant. (HUMC Mov. Br. at 7.) Each invoice contained
itemized categories of allowable services, including the ID
Clinic physician services. (Id.) The physician providing
services at the Clinic pursuant to the Grant was Dr. Stephen
Sperber. (Id.) All of the services provided by Dr. Sperber in
the Clinic were covered under the grant. (Id.) Many of the
submissions Nurse Collins prepared included the statement "I
certify that all of the attached invoices have not been paid, and
none of the items have previously [sic] reimbursed or submitted
for payment." (Jackson Cert, Ex. 7, Collins Dep at 37:1-22).
Although the facts are in dispute as to exactly when, it is
clear that at some point on or around July 2000, HUMC became
aware that the services Dr. Sperber provided to patients in the
Clinic were being funded and reimbursed by the Grant, but also
billed and reimbursed by Medicare. At his deposition, Dr. Sperber
testified he was unaware that HUMC was submitting Medicare claims under his name and thought that the services in question were not
being billed. (Jackson Cert., Ex. 9, 60:11-15.) Nurse Collins
testified at her deposition that she became aware that Medicare
was billed for services that were reimbursed under the grant when
she was contacted by Marilyn Capek, the office manager of the CID
practice to check if an error had been made in billing for the
physicians in the clinic. (Id. at 24:23 to 25:22).
At his deposition, HUMC Compliance Officer Thomas Flynn
described the circumstances surrounding the Medicare submissions.
(HUMC Mov. Br. at 9; Flynn Dep. at 58:24 to 60:5). Mr. Flynn
stated that at HUMC, the billing process generally involves data
entry with the use of an allowance code for internal accounting
purposes to create a credit for services that would not be
billed. (Id.) Here, Mr. Flynn surmised, the code was not
entered in for the services in question, thereby generating a
receivable balance and a bill to Medicare. (Id.)
In July 2000, Relator was assigned by Health Systems Management
Network, Inc. ("HSMN"), a consulting firm, to work with the
medical staff of HUMC in complying with documentation and billing
practices required by federal regulations. (Comp. at ¶ 10.) In
the course of his assignment, Hefner met with representatives of
each clinical area in order to "set goals and objectives for each
service, identify clinical leaders, create access to the medical
staff and determine timetables and milestones." (Id. at ¶ 11.)
As such, Hefner was granted direct access to HUMC medical staff.
(Id.) On July 11, 2000, Hefner met with Marilyn Capek, an
employee of CID, to discuss compliance issues. (Id. at ¶ 12.) In
the Complaint, Hefner stated that Ms. Capek advised him "the
Infectious Disease Section received a number of ongoing federal
grants, and that HUMC routinely billed patient services to the
government through one or more HUMC grants, and then rebilled
these same services to the government again through Medicare."
(Id. at ¶ 13.) Also, Relator claims that Ms. Capek stated HUMC billed patient services to a
private insurer, and then re-billed these same services to the
Government through one or more HUMC federal grants. Id.
Furthermore, Plaintiff alleges Ms. Capek stated HUMC's
intentional double-billing was ongoing, and that she felt "at
risk" should the double billing be discovered by state or federal
authorities. (Id. at ¶ 14.) Shortly after this meeting, HSMN
terminated the Plaintiff's involvement with HUMC. (Id. at ¶
16.) On July 17, 2000, Hefner's employment with HSMN was also
By way of letter dated September 11, 2000, NJPC informed Empire
Medicare Services that a number of claims had been submitted to
Medicare in error, as the services were already reimbursed
through a Ryan White Grant. (See Affidvait of Joseph Gorrell,
Ex. G.) NJPC reimbursed Empire Medicare Services in the amount of
$5,258.97, in full repayment of the errant claims. Id.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is granted only if all probative materials of
record, viewed with all inferences in favor of the non-moving
party, demonstrate that there is no genuine issue of material
fact and that the movant is entitled to judgment as a matter of
law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett,
477 U.S. 317, 330 (1986). The moving party bears the burden of showing
that there is no genuine issue of fact and it must prevail as a
matter of law, or that the non-moving party has not shown facts
relating to an essential element of the issue for which he bears
the burden. Celotex, 477 U.S. at 331. If either showing is made
then the burden shifts to the non-moving party, who must
demonstrate facts which support each element for which he bears
the burden and must establish the existence of genuine issues of
material fact. Id. The non-moving party "may not rest upon the
mere allegations ...