MEMORANDUM OF OPINION AND ORDER
LEVI, District Judge.
Several retirement homes (collectively "Horizon West") sued St. Paul Fire and Marine Insurance Co. ("St.Paul") for failing to defend Horizon West in a suit brought under the False Claims Act ("FCA"). St. Paul moves to dismiss the suit.
The facts of this case are largely undisputed. On April 4, 1997, Relators Foundation Aiding the Elderly and Marsha Baker (collectively "relators") filed a qui tam suit against Horizon West, alleging that Horizon West violated the FCA by submitting Medicare and Medicaid claims for services that were not provided, and by falsifying records to conceal substandard conditions at the nursing homes. At the time suit was filed, Horizon West held various insurance policies with St. Paul that indemnified Horizon West for liability incurred in its provision of professional services. On December 23, 1998, Horizon West tendered defense of the FCA suit to St. Paul. St. Paul declined to defend the case on February 3, 1999, contending that the suit was based on conduct not covered by Horizon West's insurance policies.
Judge Karlton granted Horizon West's motion to dismiss the FCA suit on August 20, 1999. Relators' appeal of the dismissal is currently pending before the Ninth Circuit. On March 28, 2000, Horizon West filed a breach of contract suit against St. Paul for its refusal to defend Horizon West in the FCA suit. St. Paul moves to dismiss the suit, contending that it has no duty to defend Horizon West as a matter of law.
1. Duty to defend
"Under California law, `the duty to defend is so broad that as long as the complaint contains language creating the potential of liability under an insurance policy, the insurer must defend an action against its insured.'" Zurich Ins. Co. v. Killer Music Inc., 998 F.2d 674, 678 (9th Cir.1993) (quoting CNA Casualty of California v. Seaboard Sur. Co., 176 Cal.App.3d 598, 606, 222 Cal.Rptr. 276, 279 (1986)). "To prevail, the insured ... need only show that the underlying claim may fall within policy coverage...." Montrose Chemical Corp. v. Superior Court, 6 Cal.4th 287, 300, 24 Cal.Rptr.2d 467, 475, 861 P.2d 1153 (1993). "Any doubt as to whether the facts give rise to a duty to defend is resolved in the insured's favor." Horace Mann Ins. Co. v. Barbara B., 4 Cal.4th 1076, 1081, 17 Cal.Rptr.2d 210, 214, 846 P.2d 792 (1993).
2. Scope of the insurance policy
Under the language of the Facility Coverage form, St. Paul has a duty to defend Horizon West in suits arising from three types of conduct:
(Compl., Exh. A.) The policy requires St. Paul to "defend any lawsuit brought against [Horizon West] or any other protected person for covered claims, even if the suit is groundless or fraudulent." Id. Horizon West argues that St. Paul has a duty to defend it in the FCA suit because the suit is premised on two professional services conducted by Horizon West: (1) its provision of medical services to the residents of its nursing homes, and (2) its
3. Qui Tam suit
The False Claims Act ("FCA") imposes civil monetary penalties for the submission of false claims to the government. To state a claim under the FCA, relators must allege that defendant submitted a claim for payment from the government, that the claim was false or fraudulent, and that the defendant knew the claim was false or fraudulent. See 31 U.S.C. § 3729(a).
Liability under the FCA is based solely upon the creation or presentation of false claims to the government, not upon the underlying conduct used to establish the falsity of such a claim. See 31 U.S.C. § 3729(a); U.S. ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir.1996). This important distinction was recently discussed by the Sixth Circuit in M/G Transport Services, Inc. v. Water Quality Ins. Syndicate, 234 F.3d 974 (6th Cir.2000). In M/G Transport, a relator brought an FCA suit against a subcontractor accused of falsifying records to hide violations of the Clean Water Act. The subcontractor's insurance company refused to defend the action, even though it was required to defend against suits alleging violations of the Clean Water Act. The Sixth Circuit rejected the subcontractor's argument that the insurance company had a duty to defend the FCA suit, distinguishing a violation of the Clean Water Act from the falsification of records to hide that violation:
M/G Transport, 234 F.3d at 978. See also U.S. ex rel. Hopper v. Anton, 91 F.3d 1261, 1266 (9th Cir.1996) ("The [FCA] attaches liability, not to underlying fraudulent activity, but to the `claim for payment.'") (citations omitted).
Horizon West's argument for coverage is similar to the arguments rejected in M/G Transport and Hopper. Horizon West contends that St. Paul has a duty to defend against the FCA suit because it has a duty to defend against suits alleging injury arising from substandard patient care. To support its theory that the FCA suit is based on allegations of substandard patient care, Horizon West notes that relators' complaint includes numerous allegations of substandard care at Horizon West facilities. These claims, however, do not form the basis for the FCA suit. They are relevant to the FCA suit only as evidence
4. Professional services
In Bank of California v. Opie, 663 F.2d 977 (9th Cir.1981), the Ninth Circuit discussed the definition of "professional services" in the context of an insurance policy covering such services:
Bank of California, 663 F.2d at 981 (holding that the mortgage banker's management of loan proceeds was a professional service because his activities as a mortgage banker "largely consisted of management of credit"). See also Inglewood Radiology Med. Group, Inc. v. Hosp. Shared Services, Inc., 217 Cal.App.3d 1366, 1370, 266 Cal.Rptr. 501 (1989) (holding that a physician's decision to terminate an employee constituted an administrative decision rather than a professional service).
In Medical Records Assoc., Inc. v. American Empire Surplus Lines Ins. Co., 142 F.3d 512 (1st Cir.1998), the First Circuit,
Horizon West contends that the submission of Medicare and Medicaid claims constitutes a professional service because the complexity of the billing and claims process requires that the individuals submitting the claims have specialized knowledge. (See Opp. 19-20.) Horizon West, however, fails to offer any legal authority that submission of Medicare and Medicaid claims constitutes anything other than "ordinary activities achievable by those lacking the relevant professional training and expertise." Medical Records, 142 F.3d at 514.
St. Paul's motion to dismiss is GRANTED.
IT IS SO ORDERED.
31 U.S.C. § 3729(a).