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UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
UNITED STATES OF AMERICA and the STATE
OF INDIANA ex rel. MICHAEL P. MISCH, et al.,

)
)
)
)
Plaintiffs,
)
)
v.
)
)
MEMORIAL HOSPITAL OF SOUTH BEND, INC., )
et al.
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Defendants.
)

Case No. 3:16-cv-587

MEMORANDUM IN SUPPORT OF THE STATE OF INDIANA’S
MOTION TO
DISMISS RELATORS’ STATE QUI TAM CLAIMS
Introduction
The complaint in this action, brought under the qui tam provisions of the
False Claims Act, 31 U.S.C. § 3729 et seq. (the “FCA”) and the Indiana Medicaid
False Claims and Whistleblower Protection Act, Ind. Code § 5-11-5.7-1 et seq. (the
“IMFCA”)1 alleges damages to the United States and to the State of Indiana (the
“State”). As the litigation of this matter will be based on the policies, practices, and
documents of the federal government and those of the State’s agencies coupled with
the large number of defendants named by the Relators in their First Amended
Complaint, Doc. No. 24, the State will bear a substantial burden in monitoring the

1

This Court has jurisdiction over the claims brought on behalf of the State under 31 U.S.C. § 3732 insofar as such
claims arise from the same transactions or occurrences as the action brought on behalf of the United States under
section 3730.

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case, presenting its position on the interpretation of state laws, and participating in
the discovery in this case – a case, which has little, if any merit. Accordingly, the
State has determined that, on balance, the prosecution of the claims brought on
behalf of the State2 in this case is not in the interest of the State and thus the State
seeks to exercise its prosecutorial discretion to dismiss the State Claims under Ind.
Code § 5-11-5.7-5(b).
Background
This qui tam action arose from the frustration of two attorneys, Michael P.
Misch and Bradley P. Colborn, both acting on behalf of the law firm of Anderson,
Agostino & Keller, P.C. (collectively, the “Relators”). Doc. No. 24, ¶ 87. The Relators
regularly handle personal injury and medical malpractice cases for their clients and
as part of that work, they have cause to make routine requests for their clients’
medical records. Id. The Relators had moved towards requesting electronic medical
records in an attempt to obtain fast, inexpensive access to evidence for their clients’
cases. Id. at ¶¶ 88 – 89. After being frustrated in such attempts, Relators began to
dig through Federal laws and rules regarding access to patient electronic medical
records. Id. at ¶ 89.
As a result of their research, the Relators commenced this action which has
two general theories. The first, claiming a violation of the HITECH Act3, resulting in

2

The claims brought by the Relators on behalf of the State appear to be Counts III and VI of Relators’ First Amended
Complaint, Doc. No. 24, ¶¶ 216 – 222 and 237 – 243, and Counts VI and XII of Relators’ Proposed Second Amended
Complaint, Doc. No. 51-1, ¶¶ 245 – 251 and 291 – 297, which will be referred to collectively as “the State Claims.”
3

On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) was enacted into law.
ARRA, Pub. L. 111-5, February 17, 2009, 123 Stat. 115 (2009). Under the ARRA, Division B's Title IV amended
two titles of the Social Security Act by establishing an incentive payment program through Federal grants that sought

2

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a violation of the Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, which in turn is the
basis for Relators’ claims under the FCA and the IMFCA, is based on the
assumption that a patient’s rights to receive electronic health records in an
electronic format under 42 U.S.C. § 17935(e)(1), at a cost no greater than the labor
costs in responding to the request under 42 U.S.C. § 17935(e)(2) inures to the
patient’s attorney. Id. at ¶¶ 77 – 85, (generally discussing the HITECH Act and the
Electronic Health Records Incentive Program (“EHR Program”)). Relators further
assume Defendant CIOX Health, LLC (“CIOX”), a Release of Information (“ROI”)
vendor, participated in submitting false claims or causing the submission of false
claims because CIOX had charged the Relators an amount greater than the labor
costs of compliance with their requests. Id. at ¶¶ 106 – 112.
The second theory, based on the fact that Relators could not reconcile their
experiences with four hospitals4 (the “Original Hospital Defendants”) to the reports
those hospitals made under the EHR Program, alleges those hospitals “have illegally
and falsely defrauded the United States of America and its citizens for a total
amount of $29,114,497.38 in grant funding from the Medicare and Medicaid portions
of the EHR Program during Stage 1.” Id. at ¶¶ 90 – 105.
Relators alleged that another 66 hospitals in Indiana (the “Statistically
Correlated Defendants”) have “the exact same fraudulent reporting,” not because the

to promote the adoption and meaningful use of health information technology (HIT) and qualified electronic health
records (EHRs). These provisions under the law, along with Title XIII of Division A of the ARRA, are cited to as the
"Health Information Technology for Economic and Clinical Health Act" or the "HITECH Act." Doc. No. 24, ¶ 77.
4
Defendants Memorial Hospital of South Bend, Inc., Saint Joseph Regional Medical Center, Inc., Saint Joseph
Regional Medical Center- Plymouth Campus, Inc., and St. Vincent Hospital and Health Care Center, Inc. Id. at ¶ 86.

3

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Relators had submitted any electronic records requests to these hospitals during the
relevant period, but because their numbers suggest “widespread and flagrant abuse
of the EHR Incentive program throughout Indiana hospitals.” Id. at ¶¶ 113 – 196.
Relators filed their original complaint on behalf of the United States on
September 1, 2016. Doc. No. 1. While the case was under seal, on March 2, 2017,
Relators amended their complaint so as to add claims on behalf of the State and
claims against the Statistically Correlated Defendants. Doc. No. 24. On November
17, 2017, the United States elected not to intervene, Doc. No. 37, and on November
24, 2017, the Relators’ Amended Complaint was unsealed, Doc. No. 38. The State
also declined to intervene on December 8, 2017. Doc. No. 47.
After reviewing the Relators’ Amended Complaint, the Relators’ Disclosure
Statements and exhibits, and the Relators’ Proposed Second Amended Complaint,
Doc. No. 51-1, the State has determined that further prosecution of the State Claims
is not in the public interest. The State accordingly seeks to dismiss such claims
under Ind. Code § 5-11-5.7-5(b), which provides:
(b) With the approval of the court, the attorney general or the inspector
general may dismiss the action after:
(1) notifying the person who initially filed the complaint; and
(2) the court has conducted a hearing at which the person who
initially filed the complaint was provided the opportunity to be
heard on the motion.
The court may consider a request by the attorney general or the
inspector general to dismiss the action but is not bound by the request.
Ind. Code § 5-11-5.7-5(b). The State holds this authority to dismiss even where it has
opted not to intervene. In this case, should the matter proceed, the State anticipates

4

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that it will impose substantial burdens on both the State and the United States in
the form of monitoring and participation in the proceedings as well as complying
with anticipated discovery obligations. The State believes Relators’ claims have
little, if any merit; therefore, it believes Medicaid will not recover anything in this
matter. In balancing these interests, the State has determined that further
prosecution of the State Claims in this action is not in the interest of the State, and
respectfully requests that all the State Claims be dismissed.
Discussion
A.

The State Is the Real Party in Interest under the IMFCA.

Just as the FCA is the United States’ primary tool used to redress fraud on
the United States, the IMFCA is the State’s primary tool used to redress fraud on
the Indiana Medicaid Program. The IMFCA provides for both actions by the Indiana
Attorney General, Ind. Code § 5-11-5.7-3, and by private persons, Ind. Code § 5-115.7-4, known as “relators,” who can bring an action in the name of the State to
recover for damages suffered by the State from fraudulent or false claims submitted
to the Indiana Medicaid program. Under this statutory scheme, which is modeled
after the FCA5, if the qui tam suit is successful, the State recovers the judgment and
pays a percentage of its recovery to the relators. Even if the State decides not to
intervene and the relators proceed with the conduct of the litigation on their own,

5

Since the IMFCA mirrors the Federal FCA in all material respects, analysis of the Federal FCA is equally
applicable to the IMFCA. See, U.S. v. Sleep Centers Fort Wayne, LLC, 2016 WL 1358457 at *1 n. 1, (N.D.
Ind. April 6, 2016).

5

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the State is the real party in interest, Sleep Centers, 2016 WL 1358457 at *4, and
receives at least 70 percent of any proceeds of the litigation. Ind. Code 5-11-5.7-6.
Under the IMFCA, the relators file their complaint under seal and serve it
and a written disclosure that describes all relevant material evidence and
information the relators possess on the Indiana Attorney General. Ind. Code § 5-115.7-4. The State has sixty (60) days (plus any extensions granted by the court) to
investigate the allegations and elect to intervene in the litigation. Id. If the State
intervenes in the case, the Indiana Attorney General “is responsible for prosecuting
the action and is not bound by an act of the [relators].” Ind. Code § 5-11-5.7-5(a). The
relators may continue as parties to the action, Id., but the State may settle the
action over their objection, Ind. Code § 5-11-5.7-5 (c), or may seek to limit their
participation in the litigation. Ind. Code § 5-11-5.7-5(d) and (g). If the State elects
not to intervene in the action, the relators have the right to prosecute the action. Ind.
Code § 5-11-5.7-5(e). However, that right is circumscribed by a number of limitations
designed to ensure that the State retains control over the declined action. The
relators cannot dismiss the action without the written consent of the Indiana
Attorney General. Ind. Code § 5-11-5.7-4(b). See also Sleep Centers, 2016 WL
1358457 at *3 – 4 (requiring government consent to dismiss FCA claims). Upon
showing by the Indiana Attorney General, the court may stay discovery in the qui
tam action if it would, among other things, cause the defendant to suffer undue
burden or unnecessary expense. Ind. Code § 5-11-5.7-5(d). And even when the
Indiana Attorney General initially declines to intervene in the suit, upon a showing

6

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of good cause, a court may permit the Indiana Attorney General to intervene at a
later time. Ind. Code § 5-11-5.7-5(f). Most relevant here, the State retains the right
to settle or dismiss a qui tam action over the relators’ objections, even when the
United States has declined to intervene in the action. Ind. Code § 5-11-5.7-5(b).
B.
The State Is Entitled to Substantial Deference in Its Exercise of
Prosecutorial Discretion in Dismissing the State Claims.
Although dismissal of qui tam actions is somewhat infrequent, courts have
recognized the qui tam statutes confer broad discretion on the government to dismiss
claims that are not in its interest. See Swift v. United States, 318 F. 3d 250 (D.C. Cir.
2003); United States ex rel. Sequoia Orange Co. v. Baird-Neece Packing Corp., 151
F.3d 1139 (9th Cir. 1998). While the Seventh Circuit has not addressed the standard
the government must meet to dismiss a qui tam action, the Northern District of
Illinois provided a useful analysis of the case law in U.S. ex rel. Nicholson v.
Spigelman, 2011 WL 2683161 (N.D. Ill. July 8, 2011). Relator Nicholson had brought
a qui tam action where she alleged that Defendants Lilian Spigelman, Hephzibah
Children’s Association, and Sears Pharmacy violated the False Claims Act by
unlawfully submitting at least five prescriptions to Medicaid for “off-label” use. Id. at
*1. In its discussion, the Court noted the split among the courts of appeal as to how
such motions should be handled:
The D.C. Circuit held that § 3730(c)(2) (A) “give[s] the government an
unfettered right to dismiss an action,” rendering the government’s
decision to dismiss essentially “unreviewable.” Swift v. United States,
318 F.3d 250, 252 (D.C.Cir.2003); see also Hoyte v. Am. Nat’l Red
Cross, 518 F.3d 61, 65 (D.C.Cir.2008). Dicta from the Fifth Circuit is in
accord. See Riley [v. St. Luke’s Episcopal Hosp., 252 F.3d 749, 753–54
(5th Cir.2001) (en banc)] … (“the government retains the unilateral
power to dismiss an action notwithstanding the objections of the
7

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[relator]”) (internal quotation marks omitted). The Ninth Circuit, by
contrast, applies a “two-step analysis ... to test the [government’s]
justification for dismissal: (1) identification of a valid government
purpose; and (2) a rational relation between dismissal and
accomplishment of the purpose. If the United States satisfies the twostep test, the burden switches to the relator to demonstrate that the
dismissal is fraudulent, arbitrary and capricious, or illegal.” United
States ex rel. Sequoia Orange Co. v. Baird–Neece Packing Corp., 151
F.3d 1139, 1145 (9th Cir.1998). The Tenth Circuit is in accord. See
Ridenour v. KaiserHill Co., L.L.C., 397 F.3d 925, 936 (10th Cir.2005).
The Second Circuit has expressed agreement the Ninth Circuit, albeit
in a decision that the Supreme Court reversed on other grounds. See
United States ex rel. Stevens v. State of Vt. Agency of Natural
Resources, 162 F.3d 195, 201 (2d Cir.1998) (citing Sequoia Orange with
approval), rev’d on other grounds, 529 U.S. 756 (2000).
Id. at *1. The United States sought to dismiss the case because the actual
damages were alleged to be $320 and the burdens on the government of
monitoring the case, filing briefs to clarify its position of law, responding to
discovery, and preparing government officials for depositions would cost the
United States much more than it could recover. Id. at *2. The Court found
that “The costs identified by the government easily satisfy the Sequoia test
by advancing a plausible, or arguable reason for the dismissal.” Id. (internal
quotation marks and citation omitted). Because the government presented
reasons that are rationally related to a legitimate government purposes, the
burden switched to Nicholson to demonstrate that the dismissal is
fraudulent, arbitrary and capricious, or illegal. Id. citing Sequoia, 151 F.3d at
1145. As Nicholson could not meet that burden, the Court held that the
government was entitled to dismissal under the Sequoia Orange standard. Id.
at *3. The government, having met that incrementally higher standard, made
it unnecessary for the Court to decide which standard, that of the D.C.
8

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Circuit in Swift and the Fifth Circuit in Riley, holding that the government’s
decision to dismiss the actions is unreviewable, or that of the Ninth Circuit in
Sequoia Orange, applying a two-step analysis. Additionally, the Court held
that “Nicholson’s opportunity to respond to the government’s motion to
dismiss in writing and at a hearing provided all the process she was due
under the FCA.” Id.
As presented below, the State has reasons for dismissal of the State Claims
that are rationally related to a legitimate government purpose. Just as the
government did in Nicholson, the State has determined that cost to the State of
allowing the State Claims to go forward outweighs the potential recovery, if any, to
the State. Therefore, unless the Relators show that the dismissal is fraudulent,
arbitrary and capricious, or illegal, which they cannot, the State is entitled to
dismiss the State claims.
C.

Dismissal Is Warranted in this Case.

1.
Relators are attempting to shoehorn alleged violations of the
HITECH Act, which has no right of private action, into a violation of the
Anti-Kickback Statute violation, which in of itself likewise has no right of
private action, so that they may bootstrap their claims to an IMFCA
violation where a private citizen may bring an action in the State’s name.
Relators point to certain rights and protections afforded patients under the
HITECH Act. For example, they assert that individuals have the right to their EHR
in an electronic format, to direct delivery of such EHR to other entities, to not be
charged more than the labor costs for responding to the individual’s request, and to
not have their EHR sold except in limited situations. Doc. 24, ¶ 79. Relators allege
9

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Defendant CIOX handled all of the medical records requests they sent the Original
Hospital Defendants noted in paragraphs 91 through 100 of their First Amended
Complaint and the billing invoice in each instance was for an amount that exceeded
the labor costs of compliance. Doc. 24, ¶¶106 and 109. Relators also assert that such
billing practices are part of “a pattern or practice by CIOX to directly or indirectly
seek remuneration for the illegal over-billing and sale of medical records at the
expense of the Original Hospital Defendants’ patients.” Id. at ¶ 110. Then the
Realtors tie CIOX to the Original Hospital Defendants by noting CIOX acted as a
business associate for them and assert that the behavior of CIOX in the allegedly
illegal over-billing and sale of medical records could be attributed both CIOX and the
Original Hospital Defendants. Id. at ¶¶ 111 – 112. They further allege:
214. The conduct of the defendants in seeking to directly and/or
indirectly receive remuneration illegally and in violation of the·
HITECH Act constitutes a violation of the Anti-Kickback Statute for
which the parties are subject to fines and damages for each instance in
which the defendants acted together to illegally over-charge patients.
215. By illegally seeking remuneration in violation of the AntiKickback Statute, the defendants are subject to liability under the
False Claims Act through a qui tam action.
Id. at ¶¶ 214 – 215. Relators make similar assertions against the Statistically
Correlated Defendants, to whom they did not send any relevant electronic records
requests, and their presently unknown ROI vendors. Id. at ¶ 115 and ¶¶ 231 – 236.
The Relators HITECH/AKS/FCA violation theory relies on the assumes that
when a hospital or its ROI charges a law firm more for the provision of a client’s
medical records than it would have charged the client herself is illegal because it is a

10

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sale of medical records or because it would greater than the hospital’s (or its ROI
vendor’s) labor costs in responding to a patient’s request. Relators assume too much.
First of all, the receipt of remuneration in exchange for an individual’s
protected health information when the purpose of the exchange is to provide the
individual with a copy of the individual’s protected health information pursuant to a
HIPAA request is not a sale of electronic records or protected health information. See
42 U.S.C.A. § 17935(d)(2)(F).
Next, it is important to place the rights granted through the HITECH Act into
context. The right of an individual to access EHR in electronic format granted in the
HITECH Act is provided as follows:
(e) Access to certain information in electronic format
In applying section 164.524 of title 45, Code of Federal Regulations, in
the case that a covered entity uses or maintains an electronic health
record with respect to protected health information of an individual-(1) the individual shall have a right to obtain from such covered
entity a copy of such information in an electronic format and, if
the individual chooses, to direct the covered entity to transmit
such copy directly to an entity or person designated by the
individual, provided that any such choice is clear, conspicuous,
and specific;
....
(3) notwithstanding paragraph (c)(4) of such section, any fee that
the covered entity may impose for providing such individual
with a copy of such information (or a summary or explanation of
such information) if such copy (or summary or explanation) is in
an electronic form shall not be greater than the entity's labor
costs in responding to the request for the copy (or summary or
explanation).
42 U.S.C.A. § 17935 (West) (emphasis added). Section 164.524 of title 45, Code of
Federal Regulations, is a part of the regulations promulgated by the Department of
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Health and Human Services (the “HHS”) to implement the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”), Pub. L. 104 – 191, 110 Stat.
1936 (codified as amended in scattered sections of 42 U.S.C.), which provides for an
individual’s access to the individual’s own health records. Rather than granting an
individual stand-alone rights to access EHR in an electronic form, Congress squarely
placed the individual’s rights under the HITECH Act as a complement to the
individual’s rights under HIPAA. Under the HIPAA regulations the fees a hospital
or its ROI vendor may charge an individual for providing the individual with a copy
of his protected health information are as follows:
(4) Fees. If the individual requests a copy of the protected health
information or agrees to a summary or explanation of such
information, the covered entity may impose a reasonable, cost-based
fee, provided that the fee includes only the cost of:
(i) Labor for copying the protected health information requested
by the individual, whether in paper or electronic form;
(ii) Supplies for creating the paper copy or electronic media if the
individual requests that the electronic copy be provided on
portable media;
(iii) Postage, when the individual has requested the copy, or the
summary or explanation, be mailed; and
(iv) Preparing an explanation or summary of the protected
health information, if agreed to by the individual as required by
paragraph (c)(2)(iii) of this section.
45 C.F.R. § 164.524.
Whether Relators’ assertion that the charges by CIOX for provision of the
medical records of the Relators’ client depends on the answer to the question of
whether the term “individual” in the HHS regulations implementing HIPAA
encompasses a lawyer when acting as an agent for the individual. That question was

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answered in the negative in Webb v. Smart Document Solutions, LLC, 499 F.3d 1078
(9th Cir. 2007).
In Webb, the law firm of Mann & Cook, on behalf of themselves and their
client, Kirk Webb, individually and as class representatives, (the “Plaintiffs”)
brought a class action against Smart Document Solutions, LLC6, a document
processor, based on Smart’s conduct in charging Mann & Cook for copies of Webb’s
hospital records at higher rate than the cost-rate fee at which individuals had right
to obtain pursuant to 45 C.F.R § 164.524. Id. at 1080. Webb had hired Mann & Cook
to represent him in a civil rights claim for excessive force, and in furtherance of that
action, Mann & Cook ordered copies of Webb’s medical records. Id. at 1081. Smart
charged Mann & Cook $.35 cents per page and more than $65 in other fees. Id.
Because of the fee arrangement, although Mann & Cook paid the cost of the health
care records, Webb was ultimately responsible for Smart’s charges. Id. Webb’s
responsibility for the charges was the basis for the allegation that Smart had
violated the HIPAA fee limitations by charging him, through his agent, Mann &
Cook, more than a reasonable, cost-based fee. Id.
As HIPAA does not provide a private right of action, Plaintiffs brought suit in
state court invoking a California unfair competition law that makes violations of
other state and federal laws independently actionable. Id. Smart removed the case to
federal court on the basis of diversity of citizenship in class actions and filed a

6

Smart Document Solutions, LLC changed its name to HealthPort Technologies, LLC in October 2007.
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=2432655 , last visited on December 27,
2017. The successor to HealthPort Technologies, LLC is CIOX Health, LLC, one of the defendants in this action.
Doc. No. 24, ¶ 10.

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motion to dismiss for failure to state a claim, arguing specifically that “Plaintiff’s
violations did not constitute a HIPAA violation because the HIPAA fee limitations
apply only to individual patients who request records on their own behalf, and not to
attorneys who act as agents of their clients. Id. at 1081 – 1082. The district court
granted Smart’s motion and the Plaintiffs appealed. Id. at 1082.
The Ninth Circuit, after determining that it have jurisdiction over the
California unfair competition claim, analyzed the HIPAA statutory and regulatory
framework. The Court noted that HHS “defined ‘individual’ as ‘the person who is the
subject of the protected health information.’” Id. at 1084, citing 45 C.F.R. § 160.103.
The Court further noted that the only situation in which other persons may be
treated as the individual is when a personal representative is authorized to make
healthcare-related decisions for the individual citing 45 C.F.R. § 164.502(g):
As specified in this paragraph, a covered entity must, except [in
limited circumstances], treat a personal representative as the
individual for purposes of this subchapter.... If under applicable law a
person has authority to act on behalf of an individual who is an adult
or an emancipated minor in making decisions related to health care, a
covered entity must treat such person as a personal representative
under this subchapter, with respect to protected health information
relevant to personal representation.
Id. at 1084 – 1085. Applying canons of statutory construction, the Ninth Circuit
concluded that “individual” should be afforded its plain meaning. Id. at 1085. Nor
could Plaintiffs persuade the Court that regulatory intent overcomes plain meaning;
instead the Court noted that HHS considered expanding the definition of
“individual” to include legal representatives, but did not, and instead included in the
final rule a standard for “personal representatives.” Id. at 1085. The Court also
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noted that the HHS responded “to a public comment asking whether the fee
limitations applied to ‘payers, attorneys, or entities that have the individual’s
authorization … ‘HHS’s subsequent clarification explained that the Rule … limits
only the fees that may be charged to individuals or their personal representatives.’”
Id. at 1086 (emphasis added by the Court) citing 67 Fed. Reg. 53254. The Court held
that “The final commentary and subsequent clarification extinguish any doubt that
the ‘personal representative’ category constitutes the only class of persons that may
be treated as the ‘individual’ other than the individuals themselves.” Id. at 1086. In
response to Plaintiffs’ argument that the “legal representatives “ and “attorneys”
referred to in the regulatory materials do not necessarily include “attorneys for
individuals”, the Court forcefully stated that “The DHHS final commentary and
subsequent clarification clearly preclude both third party attorneys and private legal
representatives from obtaining the reduced fees.” Id. at 1086 (emphasis in the
original). The Court held that the Plaintiffs did not sufficiently alleged a HIPAA
violation, therefore, the have not stated a claim under California’s unfair
competition law and dismissal under Rule 12(b)(6) was appropriate. Id. at 1088.
The Ninth Circuit’s ruling in Webb is applicable to the case before this Court.
Here the Relators, like Mann & Cook in Webb, are attorneys acting as agents for
their clients and are seeking their clients’ medical records for use in their clients
lawsuits. Here the Relators, like Mann & Cook in Webb, knowing that HIPAA does
not have a private right of action, seek to use another statute, here the AntiKickback Statute, the FCA and the IMFCA to obtain damages based on a HIPAA

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violation. Like Mann & Cook in Webb, they have failed to state a HIPAA violation.
Because they failed to state a HIPAA violation, there is no basis for asserting that
the remuneration sought by CIOX (or the Original Hospital Defendants or the
Statistically Correlated Defendants) was illegal, therefore defeating the AntiKickback claims. Without the Anti-Kickback claims, the defendants are not subject
to liability under the FCA or the IMFCA through a qui tam action.
2.

The Relators False Attestation Claims fail.
The key to the Relators’ second theory, is an assumption that the attestation

provided by the Defendant Hospitals under the EHR Incentive Program has to be
false or fraudulent. According to the Relators, under the HITECH Act the Defendant
Hospitals received federal grants based on their “meaningful use” of Health
Information Technology and EHR. During the time period in question, October 1,
2010 to September 30, 2013, the Defendant Hospitals provided CMS an attestation
that they met certain core measures, or they would not be eligible to receive grant
funding. Doc. No. 24 ¶¶ 81-82. One such measure, Core Measure No. 11, “had an
objective of promptly providing patients with electronic health records upon their
request within three (3) business days of receiving such a request from a patient or
their agent.” Id. at ¶ 83. Hospitals had to report the number of times such a request
was made [(the denominator]) and how many times the hospital complied with the
requirement [(the numerator]). Id. at ¶ 84. If a hospital achieved a 50% success rate
or more, the hospital would remain eligible to receive the grants, [assuming it met
the other standards]. Id. The Relators assert that because the Core Measure No. 11
affirmations that original four defendants made could not have included their
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requests, the statements were false and “the Original Hospital Defendants are
defrauding the American public by falsely recording or reporting their compliance
with Core Measure No. 11 of the EHR Program.” Id. at ¶ 84. Based solely on that
assertion and their belief that the Statistically Correlated Defendants had reported
Core Measure 11 compliance data, which in their minds is highly suggestive of the
fact that the exact same fraudulent reporting of Core Measure 11 figures that is
alleged against the Original Hospital Defendants is taking place at the hospitals
operated by the Statistically Correlated Defendants, the Relators added an
additional sixty-six (66) defendants. The problem with the Relators’ theory is that it
is wrong.
The Department of Health and Human Services (HHS), when publishing the
final rule implementing the provisions of the HITECH Act incentive programs
discussed the health outcomes policy priority embodied in Core Measure No. 11 (and
codified at 42 C.F.R. 495.6(f)(11)) as “to engage patients and their families in their
healthcare.” Medicare and Medicaid Programs; Electronic Health Record Incentive
Program; Final Rule, 75 Fed. Reg. 44,314, 44,353 (July 28, 2010) (to be codified at 42
C.F.R. pts. 412, 413, 422, and 495). The care goal for meaningful use addresses this
priority, to wit to “provide patients and families with timely access to data,
knowledge, and tools to make informed decisions and to manage their health.” Id.
When responding to whether third-party requests should be include in the
denominator, the HHS response was:

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 USDC IN/ND case 3:16-cv-00587-JD-MGG document 154 filed 12/29/17 page 18 of 23
Only specific third party requests for information are included in the
denominator. As we stated in the opening discussion for this health
care priority, providing the copy to a family member or patient's
authorized representative consistent with federal and state law may
substitute for a disclosure of the information to the patient and count
in the numerator. A request from the same would count in the
denominator. All other third party requests are not included in the
numerator or the denominator.
Id. at 44354. (emphasis added). The reason why Relators could not reconcile their
experience to the reported numbers, was that the reported numbers did and should
not have included requests from third parties, such as patients’ attorneys. Therefore
the Relators’ false attestation claims fail.
3.
It is not in the public interest for the State to expend its limited
resources on this case.
After reviewing the Relators’ Amended Complaint, the Relators’ Disclosure
Statements and exhibits, and the Relators’ Proposed Second Amended Complaint the
State has determined that further prosecution of the State Claims is not in the
public interest. It is clear that the case will require substantial participation by the
State if the State Claims continue to be prosecuted. As such, the State should be able
to exercise broad discretion to determine which IMFCA cases proceed, especially
where the prosecution of the State Claims will involve substantial state resources
and a doubtful recovery.
While the State might not be the focal point for discovery for payment
decisions and federal policy determinations, the State anticipates that the burdens
imposed by discovery in this matter will be substantial. Relators have named
seventy (70) hospitals and CIOX as defendants, with an untold number of ROI
providers that may be added as a product of obtaining discovery from the sixty-six
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 USDC IN/ND case 3:16-cv-00587-JD-MGG document 154 filed 12/29/17 page 19 of 23
(66) Statistically Correlated Defendants. To prove their case, the Relators will need
to propound discovery requests targeted at each defendant and targeted at the State.
Likewise, each of the defendants will be entitled to obtain discovery from the
Relators, the United States, and the State. Relators will need to seek production of
the communications and contracts between CIOX and the Original Hospital
Defendants, as well as similar production from each of the Statistically Correlated
Defendants and their ROI vendors. More likely than not, the Relators will need
discovery from each hospital defendant’s EHR vendors, along with production
establishing the veracity, or lack thereof, of the reporting that each hospital
defendant made regarding Core Measure No. 11. In addition the “paper” discovery, a
large number of depositions will be required. Not only will the State be required to
prepare state officials for their depositions and represent such officials at those
depositions, but it would be incumbent upon the State to either attend or obtain the
transcripts of the depositions of the Relators, the defendants’ witnesses, the federal
government witnesses. Such massive discovery will require the coordination of not
only the Relators and the Defendants, but also the State and the United States.
To the extent that there are discovery disputes, the State will at the very least
have to review any motions and related briefing. One source of potential dispute is
likely to arise from the fact that the Relators, being two attorneys and the law firm
that employs them, are representing themselves in this action.
With regard to other motion practice, the State will have to present its
position on the interpretation of state laws and prevent further misstatements of

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 USDC IN/ND case 3:16-cv-00587-JD-MGG document 154 filed 12/29/17 page 20 of 23
Indiana law by the parties. For example, Ind. Code § 5-11-5.7-1(a) provides: “This
chapter applies only to claims, requests, demands, statements, records, acts, and
omissions made or submitted in relation to the Medicaid program described in IC 1215.” Rather than interpreting the sentence as limiting the scope of the chapter to
false claims submitted to Medicaid, as opposed to other false claims submitted to the
State, which are the subject of Ind. Code § 5-11-5.5-1 et seq., Relators claim the
sentence expands the scope of the IMFCA to include portions, if not all, of Ind. Code
12-15:
218. Additionally, the Indiana Medicaid false claims act follows the
Federal statute by incorporating anti-kickback provisions into its
definition of false claims.
219. The Medicaid portion of this statute specifically references claims,
statements, records, or omissions made or submitted in relation to or
violations of the Indiana Medicaid program pursuant to Ind. Code § 1215. This includes conduct which wrongfully deprives the state of
Indiana of public funds pursuant to· Ind. Code § 12-15-24-1, as well as
soliciting, offering, or receiving kickbacks, fees, or rebates pursuant to
Ind. Code § 12-15-24-2.
Doc. No. 24, ¶ 218 – 219.
Given that any recovery is highly unlikely, it is not in the best interest
to permit the prosecution of the State Claims to go any further. The purpose
of the IMFCA is to recover money to the public fisc. That purpose will not be
served by this litigation, which will likely cost the State more in expenses
that it can possibly recover.7

7

Unlike the State, Relators’ counsel, if they succeed, are entitled to attorney’s fees, costs, and expenses; if Relators
are unsuccessful, defendants may be awarded attorney’s fees, costs, and expenses. Ind. Code 5-11-5.7-6.

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The State has limited resources to investigate fraud, and this case will
divert funds and personnel from other investigations without recovering
funds for the Indiana Medicaid Program. The cost-benefit analysis is clear –
it is not in the public interest to spend taxpayer dollars to respond to
discovery and monitor this case. Accordingly, the court should dismiss the
State Claims under Ind. Code § 5-11-5.7-5(b).
Conclusion
For the foregoing reasons, the State respectfully submits that the State
Claims should be dismissed pursuant to Ind. Code § 5-11-5.7-5(b).

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Respectfully submitted,
STATE OF INDIANA
CURTIS T. HILL, JR.
Attorney General
Attorney No. 13999-20
/s/ Lawrence J. Carcare II
Lawrence J. Carcare II
Indiana Attorney No. 18557-49
Deputy Attorney General
Office of the Indiana Attorney General
Medicaid Fraud Control Unit
8005 Castleway Dr.
Indianapolis, IN 46250-1946
Tel: (317) 915-5319
Lawrence.Carcare@atg.in.gov

Dated: December 29, 2017

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 USDC IN/ND case 3:16-cv-00587-JD-MGG document 154 filed 12/29/17 page 23 of 23
CERTIFICATE OF SERVICE
I hereby certify that on the 29th day of December 2017, a copy of the foregoing
was filed electronically with the Court. Notice of this filing will be sent to all parties
registered on the Court’s electronic filing system. Parties may access this filing
through the Court’s system.

/s/ Lawrence J. Carcare II
Lawrence J. Carcare II, 18557-49
Deputy Attorney General
Office of the Attorney General
Medicaid Fraud Control Unit
8005 Castleway Drive
Indianapolis, IN 46250
(317) 915-5319
(317) 232-7979
Lawrence.Carcare@atg.in.gov

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