USA ex rel. Prechelle Shannon v. BHG Holdings, LLC

── USA ex rel. Prechelle Shannon v. BHG Holdings, LLC ── Court: Court of Appeals for the D.C. Circuit Date: May 11, 2026 Category: General United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 25-7059 September Term, 2025 FILED ON: MAY 11, 2026 UNITED STATES OF AMERICA, EX REL. PRECHELLE SHANNON, ET AL., AND PRECHELLE SHANNON, APPELLANT v. BHG HOLDINGS, LLC, DOING BUSINESS AS BEHAVIORAL HEALTH GROUP, ET AL., APPELLEES Appeal from the United States District Court for the District of Columbia (No. 1:22-cv-00354) Before: PAN and GARCIA, Circuit Judges, and EDWARDS, Senior Circuit Judge JUDGMENT This appeal was considered after oral argument on the briefs and the district court record. The Court has afforded the issues full consideration and determined that they do not warrant a published opinion. See D.C. Cir. R. 36(d). For the reasons stated below, it is ORDERED and ADJUDGED that the district court’s order be AFFIRMED. * * * Prechelle Shannon sued her former employer BHG Holdings, LLC (d/b/a Behavioral Health Group). She alleged that BHG violated the False Claims Act and D.C. and Virginia anti- fraud statutes. The district court dismissed Shannon’s complaint with prejudice. We affirm. I BHG operates a network of outpatient opioid treatment and recovery centers in the United States. In November 2020, BHG hired Shannon to help manage two of its clinics, one in Virginia and the other in Washington, D.C. During her tenure, Shannon noticed what she believed were fraudulent practices. She reported those practices to her supervisors and later resigned from the company.  In November 2021, Shannon sued BHG in the District of New Jersey under the False Claims Act and several state anti-fraud statutes. That action was transferred to the District of Columbia. The United States declined to intervene. Shannon then amended her complaint. As relevant here, Shannon alleged two fraudulent schemes. The first concerns BHG’s administration of urine drug tests. Urine drug tests are “common laboratory test[s] conducted to determine whether a patient is taking drugs that might interfere with planned medical treatment, or to ensure that a patient in [a] recovery program is not abusing prescription or illicit drugs.” Am. Compl. ¶ 44. According to Shannon, BHG “implemented a practice of designating certain patients as ‘Code 1’” and issuing those patients “standing orders” to take urine drug tests “without regard to medical necessity.” Id. ¶ 67. Patients designated as Code 1 were allegedly ordered to take “duplicative tests” up to “five times per week,” and they would sometimes take “confirmatory drug tests regardless of the results of [their] initial screen” or even “skip[] the initial preliminary screening altogether.” Id. ¶¶ 67–69. In an internal email, moreover, the Medical Director for BHG-D.C. expressed “concern[s]” that the Regional Director for BHG-D.C./Virginia “had instructed [the medical staff] to change the . . . urine tests to weekly tests for several groups,” as the Medical Director believed that “weekly testing for all patient groups is not medically justifiable.” Id. ¶ 71. Citing Medicare and Medicaid regulations requiring that covered laboratory testing be medically necessary, Shannon alleged that BHG “submitted thousands of false claims” for those unnecessary tests through its D.C. and Virginia clinics. Id. ¶¶ 38, 42, 76. The second alleged scheme concerns BHG’s use of addiction counselors. Shannon alleged that BHG “adopted a practice of using unlicensed addiction counselors to perform drug treatment services . . . at eight of its Virginia clinics.” Id. ¶¶ 77, 80, 81. According to Shanno