Johnson v. Golden Gate National Senior Care, L.L.C.

Background

This qui tam action was filed in 2008. Under the False Claims Act, a private whistleblower may sue on behalf of the government to recover damages for materially false claims submitted for payment. Ricia Johnson and Health Dimensions Rehabilitation, Inc. alleged that Golden Gate National Senior Care, L.L.C.; GGNSC Holdings, L.L.C.; GGNSC Wayzata, L.L.C.; and Aegis Therapies, Inc. submitted false Medicare claims connected to physical and occupational therapy services for nursing-home patients.

The case was divided into two phases. In December 2016, the court granted in part and denied in part the defendants’ motion for summary judgment concerning Phase I. In January 2020, the defendants sought summary judgment on the remaining Phase II claims and theories, including scope of license, skilled services, supervision, group therapy, claims against certain defendants and conspiracy, and reverse False Claims Act allegations. On April 20, 2020, the court largely denied that motion but requested supplemental briefing on the relationship among certain defendants and the effect of the conspiracy claim.

Summary-judgment standard

Summary judgment is appropriate when the evidence shows no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. The court must view the evidence and reasonable inferences in favor of the party opposing the motion. The nonmoving party must identify specific facts showing a genuine issue for trial.

Claims against Golden Gate and GGNSC Holdings

The defendants argued that the claims against Golden Gate National Senior Care, L.L.C. and GGNSC Holdings, L.L.C. should be dismissed because the relators had not shown that either entity knowingly presented or caused the presentation of false claims. They also argued that one company could not be liable under the False Claims Act merely because it was affiliated with another company.

The relators responded that the evidence linked both entities to the operations at Golden Living Center—Hillcrest of Wayzata. They pointed to admissions in the defendants’ pleadings and discovery responses that Golden Gate, GGNSC Holdings, and GGNSC Wayzata were all doing business as Golden Living Center—Hillcrest of Wayzata.

The court agreed with the relators. It found sufficient evidence for a reasonable factfinder to determine that Golden Gate and GGNSC Holdings could be liable for the Hillcrest operations because they repeatedly held themselves out as doing business under that name. The court therefore declined to dismiss either entity as a defendant.

Conspiracy claim

The defendants argued that the conspiracy count should be dismissed because the relators lacked evidence of an agreement to obtain payment of false claims and because the alleged conspiracy involved related corporate entities. The relators responded that the conspiracy claim might be unnecessary because each defendant could be liable as a direct participant, but that the claim might be considered as an alternative theory if the defendants relied on separate corporate identities.

The court agreed that the conspiracy count was likely unnecessary in light of its conclusion that there was sufficient evidence linking Golden Gate and GGNSC Holdings to the Hillcrest operations. However, it concluded that whether the count should be dismissed was better addressed as a pretrial matter. The court therefore declined to dismiss the conspiracy count at that time.

Ruling

Judge Donovan W. Frank denied the defendants’ motion for summary judgment in its entirety. The court specifically declined to dismiss Golden Gate National Senior Care, L.L.C. and GGNSC Holdings, L.L.C. as defendants and declined to dismiss the conspiracy count at that time. The opinion states that evidentiary issues might still need to be addressed during the pretrial conference.