PHILADELPHIA - The U.S. District Court for the Eastern District of Pennsylvania has denied a motion to dismiss filed by Mednax Inc.
The lawsuit involves allegations of inflated insurance claims for health care services in neonatal intensive care units.
Aetna filed the lawsuit with several claims, including fraud, negligent misrepresentation, unjust enrichment and civil conspiracy against Mednax Inc., Pediatrix Medical Group Inc., and Mednax Services Inc.
Mednax first argued the complaint should be dismissed for lack of personal jurisdiction, the opinion stated.
Aetna argues that at least one of the Mednax defendants consented to general jurisdiction by registering to do business in Pennsylvania; that the others are subject to personal jurisdiction by having conspired with the registered entity; and specific jurisdiction over all three defendants is appropriate because at least a portion of the claims arise from conduct taking place within Pennsylvania.
“Because a plaintiff need not conclusively establish personal jurisdiction at the pleadings stage, the court concludes that Aetna’s allegations are sufficiently indicative of personal jurisdiction to preclude dismissal,” the opinion stated.
Although Mednax argues there are no allegations in the complaint to support personal jurisdiction, the court said at least one of the defendants, Mednax Services Inc., is registered to do business in Pennsylvania.
According to Mednax’s second argument, cited by the court, Aetna’s claims must be dismissed as time-barred by the statute of limitations. Aetna counters that its claims are timely under the continuing violations doctrine and the discovery rule, the opinion stated.
“When a defendant’s conduct is part of a continuing practice, an action is timely so long as the last act evidencing the continuing practice falls within the limitations period; in such an instance, the court will grant relief for the earlier related acts that would otherwise be time barred,” the district court said.
In this case, the district court said Aetna’s claims shall not be dismissed as untimely because “Aetna has alleged an ongoing scheme that persisting into the limitations period, it is not appropriate to resolve at the pleadings stage whether the continuing violations doctrine allows Aetna to maintain suit for actions that occurred prior to the limitations period.”
Mednax’s third argument is that Aetna has failed to adequately set out the facts of the alleged fraud, the opinion stated.
“Though Aetna’s complaint would certainly benefit from additional detail, it has sufficiently stated its claims,” the court said. According to the opinion, the plaintiffs describe a large health care billing fraud, but omit allegations of a specific, fraudulent claim. The court said Aetna has outlined the means of overbilling for partially used vials of medicine.
“Aetna here sets out the forms that Mednax is required to submit, and the specific types of “upcoding” that allegedly occur — for example, listing an infant as requiring critical care rather than ‘general hospital care,’” the opinion stated.
Mednax’s fourth argument, according to the court, is that Aetna only included conclusory allegations; that it justifiably relied on the “upcoded” forms; and it bears an increased burden in pleading justifiable reliance, which it has not met because “Aetna is a sophisticated entity with access to documents that might have revealed the alleged fraud.”
“As a preliminary matter, several of Aetna’s claims do not require justifiable reliance,” the opinion stated. “Accordingly, even if allegations of justifiable reliance were wanting, there would be no basis to dismiss the complaint outright.”