FILED
NOT FOR PUBLICATION
AUG 09 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA and No. 13-17624
STATE OF CALIFORNIA ex rel. SCOTT
H.M. DRISCOLL, M.D., D.C. No.
1:11-cv-01776-LJO-SMS
Plaintiffs,
and MEMORANDUM*
SCOTT H.M. DRISCOLL, M.D.,
individually and personally,
Plaintiff-Appellant,
v.
TODD SPENCER M.D. MEDICAL
GROUP, INC.; TODD SPENCER, M.D.;
MADERA COMMUNITY HOSPITAL,
Defendants-Appellees.
Appeal from the United States District Court
for the Eastern District of California
Lawrence J. O’Neill, Chief Judge, Presiding
Submitted July 20, 2016**
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes that this case is suitable for decision
without oral argument. Fed. R. App. P. 34(a)(2).
Before: GRABER and TALLMAN, Circuit Judges, and RAKOFF,*** District
Judge.
Relator Scott H.M. Driscoll, M.D., appeals an order dismissing his first
amended complaint pursuant to Federal Rule of Civil Procedure 9(b) and the denial
of his motion to amend his complaint. We review de novo the dismissal of
Relator’s complaint under Rule 9(b) and for abuse of discretion the denial of
Relator’s motion to amend. Bly-Magee v. California, 236 F.3d 1014, 1017 (9th
Cir. 2001).
In an action alleging fraud, a plaintiff must meet a heightened pleading
standard. "In alleging fraud or mistake, Rule 9(b) requires a party to state with
particularity the circumstances constituting fraud or mistake, including the who,
what, when, where, and how of the misconduct charged." Ebeid ex rel. United
States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) (internal quotation marks
and brackets omitted). But that bar is not insurmountable. The plaintiff need only
"provide enough detail to give [the defendant] notice of the particular misconduct
which is alleged to constitute the fraud charged so that [he] can defend against the
***
The Honorable Jed S. Rakoff, United States District Judge for the
Southern District of New York, sitting by designation.
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charge and not just deny that [he has] done anything wrong." Id. at 999 (internal
quotation marks omitted).
Here, the operative complaint alleges that Defendants, Todd Spencer M.D.
Medical Group, Inc., and its principal Todd Spencer, M.D., engaged in Medicare
fraud. Among other allegations, the complaint states that Defendants conducted
unnecessary CT-scans of the abdomen and pelvis, unnecessary CT angiography on
tissues of the neck, and unnecessarily expensive CT scans, and that they
"unbundled" procedures in order to increase billings artificially.
The complaint provides several detailed, representative examples of this
alleged misconduct. For example, it alleges that, on December 14, 2007, Relator
personally observed unnecessary CT exams of the abdomen and pelvis on
prisoners from two prisons and that those exams were performed without
intravenous contrast, thus providing no medical value. As another example, the
complaint also states that, in December 2009, Relator was instructed to "unbundle"
a procedure before billing, that is, to break one single medical study into five
component parts to create a "fiction"; such unbundling allegedly occurred in 10%
of Defendants’ cases.
Those allegations, among others, are sufficiently specific that Defendants
can answer the complaint and defend against the charges. In Ebeid, the relator was
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"not an insider" who had knowledge of the allegedly improper practices, so his
claim depended on speculation. 616 F.3d at 995. By contrast, here, Relator has
personal knowledge of Defendants’ practices because Relator was part of
Defendants’ operation.
By holding that the district court erred in dismissing the entire operative
complaint, we do not mean to suggest that the entire complaint is sufficiently
specific. For example, the present complaint alleges generally that tests numbering
in the thousands were fraudulent, covering a period much longer than the three
years during which Relator worked with Dr. Spencer. Accordingly, we remand
with instructions to allow Relator another opportunity to amend the complaint to
address these deficiencies and to narrow the scope of the complaint so that the
litigation will be manageable. See United States ex rel. Lee v. SmithKline
Beecham, Inc., 245 F.3d 1048, 1051–54 (9th Cir. 2001) (holding that the district
court should not have dismissed a False Claims Act complaint with prejudice, even
though it was not specific enough under Rule 9(b), because amendment would not
be futile).
REVERSED and REMANDED for further proceedings.
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