United States District Court, D. Connecticut
United States ex rel. RONALD I. CHORCHES, Bankruptcy Trustee, Bringing this action on behalf of THE UNITED STATES OF AMERICA, the ESTATE OF PAUL FABULA, and PAUL FABULA, Individually Plaintiff-Relator
AMERICAN MEDICAL RESPONSE, INC., Defendant.
MEMORANDUM AND ORDER
Michael P. Shea, U.S.D.J.
Ronald Chorches, trustee of the bankruptcy estate of Paul
Fabula, brings this action under the False Claims Act
(“FCA”), 31 U.S.C. § 3729 et seq.,
against Defendant American Medical Response, Inc.
(“AMR”). Pending before the Court is
Plaintiff-Relator's motion for leave to file the Fourth
Amended Complaint (“FAC”). (ECF No. 105.)
assume familiarity with the underlying facts and this
Court's and the Court of Appeals' previous rulings. I
summarize certain relevant procedural facts below.
22, 2012, Fabula filed this qui tam action as a
relator on behalf of the United States. (ECF No. 1.) The
United States declined to intervene in 2013. (ECF No. 18.)
Fabula filed his second amended complaint
(“SAC”), bringing a claim on behalf of the United
States under the False Claims Act, 31 U.S.C. §§
3729(a)(1) and (a)(2) (“FCA”), and a claim on his
own behalf for retaliation in violation of 31 U.S.C. §
3730(h). The Court dismissed the FCA claim and the
retaliation claim, but stayed its decision to give Chorches,
the trustee of Fabula's bankruptcy estate, a chance to
pursue the claims. (ECF No. 67.) On April 3, 2015, the Court
entered an order, stating in relevant part, that no further
amendments would be permitted after April 24, 2015. (ECF No.
75.) Chorches pursued the FCA claim by timely filing the
Third Amended Complaint (“TAC”), which the Court
later dismissed as well. (ECF No. 82.) In July 2017, the
Second Circuit reversed the dismissal of the claims, holding
that the SAC stated a retaliation claim and that the TAC
stated a claim under the FCA. See United States ex rel.
Chorches v. Am. Med. Response, Inc., 865 F.3d 71 (2d
and Fabula now seek leave to file the FAC. The proposed
amendments would principally 1) substitute Fabula for
Chorches as relator on the FCA claim, now that Fabula's
bankruptcy proceeding has concluded and the claim has been
transferred back to him; and 2) join the retaliation claim,
previously set forth in the SAC, with the FCA claim,
previously set forth in the TAC, in a single complaint.
Chorches and Fabula also propose “some additional,
nonsubstantive ‘clean-up' changes” in the
FAC. (ECF No. 106; ECF No. 113.)
trial, “a party may amend its pleading only with the
opposing party's written consent or the court's
leave, ” which the Court should “freely give . .
. when justice so requires.” Fed.R.Civ.P. 15(a)(2).
Despite the liberal standard for amending or supplementing
pleadings, “[a] district court has discretion to deny
leave for good reason, including futility, bad faith, undue
delay, or undue prejudice to the opposing party.”
McCarthy v. Dun & Bradstreet Corp., 482 F.3d
184, 200 (2d Cir. 2007) (citing Foman v. Davis, 371
U.S. 178, 182 (1962)).
opposes the motion to amend only to the extent that the
purported “non-substantive ‘clean-up'
changes” will expand the geographic scope of the
allegations beyond Connecticut; AMR does not oppose the
substitution of Fabula as relator on the FCA claim or the
joinder of the FCA and retaliation claims. (ECF No. 109 at
4.) The allegations in the proposed FAC do not, however,
expand the geographic scope of the claims in this action.
argues that the amended basis for venue in this District will
expand the geographic scope of this action beyond
Connecticut, and will prejudice AMR through the expansion of
discovery. (ECF No. 109 at 4.) Plaintiff-Relator previously
alleged the following as the basis for venue in this
District: “Venue is proper in this District pursuant to
31 U.S.C. §§ 3730(b) and 3732(a), and 28 U.S.C.
§ 1331, because AMR's wrongful acts occurred in
Connecticut.” (TAC ¶ 7.) The proposed FAC alleges,
“Venue is proper in this District pursuant to 31 U.S.C.
§ 3732(a) and 28 U.S.C. § 1391(b)(1) & (2)
because AMR is a resident of and transacts business in the
State of Connecticut and because a substantial part
of the proscribed events or omissions giving rise to Mr.
Fabula's claims occurred in the State of
Connecticut.” (FAC ¶ 4 (emphasis added).) Although
AMR argues that the language “a substantial part
of” in the proposed FAC implies that Mr. Fabula's
claim will now be based on nationwide allegations rather than
Connecticut-based allegations only, the proposed
amendment's language, which mirrors that of the statute
providing for venue in “a judicial district in which a
substantial part of the events or omissions giving rise to
the claim occurred, ” see 28 U.S.C. §
1391(b)(2), merely corrects an error in
Plaintiff-Relator's basis for venue, which previously
cited the wrong federal statute.
that venue is allegedly proper in the District of Connecticut
does not, and never has, limited Plaintiff-Relator to
alleging facts arising in Connecticut. Indeed, the TAC
included facts that could have entitled Plaintiff to
discovery extending beyond Connecticut. (See, e.g.,
TAC ¶ 121, alleging that in a “nationwide
agreement, the [Corporate Integrity Agreement] went on to
include specific, detailed obligations of AMR in order to
fulfill all of its obligations - nationwide - under this
agreement;” TAC ¶ 123, alleging that [Jeffrey]
Boyd acted as AMR's “agent in the Northeast and
particularly in the New Haven operation, to implement the
nationwide electronic changes in the billing
procedures;” TAC ¶ 125, alleging that “Boyd
boasted to ambulance personnel . . . about how he was the one
who, at the national level, was responsible for designing and
implementing features of the new billing program;” TAC
¶ 127, alleging that “companywide sessions for
training to address AMR's ‘new documentation
policies' . . . were being given to personnel in all of
AMR's 2, 100 branches across the United States;”
TAC ¶ 130, alleging that “Boyd advised Fabula that
. . . because of its heavy volume, New Haven had been allowed
by the national corporate office of AMR for years to maintain
the level of having a relatively low percentage of its
ambulance runs being billed to Medicare;” TAC ¶
131, alleging that “Boyd told all the ambulance
personnel . . . that every division of AMR had policies and
training in place that was focused on increasing the billing
reimbursement from Medicare, and that ‘While New Haven
was at around 40% for collecting from Medicare, other
divisions were closer to 70%;'” TAC ¶ 132,
alleging that “[f]ollowing the signing of the CIA, the
policy from AMR at the corporate national level . . . was to
increase the New Haven subsidiary's Medicare
reimbursements to 70% of its runs;” TAC ¶ 136,
alleging that “Boyd stated to a class of ambulance
personnel . . . that for years every division of AMR had
policies and training in place that increased billing
payments from Medicare;” TAC ¶ 141, alleging that
“Boyd boasted that . . . he'd been one of the
designers of the nationwide application of the new electronic
PCR filing system.”) Thus, AMR has not demonstrated
that it will be prejudiced through the expansion of discovery
beyond what Plaintiff-Relator would have been entitled to
under previous versions of the complaint.
also argues that to the extent Plaintiff-Relator intends to
expand the scope of this action beyond Connecticut (which, as
discussed above, is based on the incorrect premise that this
action was previously limited to alleging facts arising
within Connecticut), the proposed new allegation that
“a substantial part of the proscribed events or
omissions giving rise to Mr. Fabula's claims occurred in
the State of Connecticut” does not satisfy Federal Rule
of Civil Procedure 9(b), which requires fraud claims to be
pled with particularity. (ECF No. 109 at 5.) AMR contends
that the proposed amendment is therefore futile.
(Id.) But while allegations of fraud must be pled
with particularity, Rule 9(b)'s heightened pleading
standard does not apply to allegations forming the basis for
venue. See Fed. R. Civ. P. 9(b) (“In alleging
fraud or mistake, a party must state with particularity
the circumstances constituting fraud or
mistake.”) (emphasis added). Finally, to the
extent AMR argues that allegations extending beyond
Connecticut that are substantially unchanged from the TAC do
not satisfy Rule 9(b), the Court of Appeals has already ruled
that those allegations state a claim for relief. See
United States ex rel. Chorches, 865 F.3d at 81-89
(holding that Plaintiff-Relator adequately pled a qui
tam claim under Rule 9(b)).
the only changes in the proposed FAC to which AMR objects are
not futile and will not unduly prejudice AMR, I GRANT the
motion to amend. Defendant ...