Thomas Stephenson
Winter ex rel. U.S. v. Gardens Reg'l. Hosp. and Med. Ctr., Inc., 953 F.3d 1108 (9th Cir. 2020), the court of appeals reversed a district court order dismissing the plaintiff's qui tam False Claims Act (FCA) complaint. The plaintiff's complaint alleged that the defendant knowingly submitted Medicare claims with false "medically necessary" certifications from doctors authorizing inpatient hospitalizations. In a matter of first impression, the court held that a doctor's certification of medical necessity for inpatient hospitalizations can be false or fraudulent within the meaning of the FCA. The court rejected the district court's holding that only "objectively" false statements violate the FCA. On the contrary, the court found the FCA imposes liability for objective and subjective falsity. Moreover, the FCA carves out no exemption for clinical opinions, because "a doctor, like anyone else, can express an opinion that he knows to be false." According to the court, "an opinion with no basis in fact can be fraudulent if expressed with scienter." Additionally, the court held that a doctor's false "medically necessary" certification satisfies the "materiality" element of an FCA claim. False certifications are material because Medicare reimburses hospital expenditures only when an inpatient admission is certified as medically necessary by a treating physician. Accordingly, the "medically necessary" certifications are material to Medicare's decision to pay, and Medicare would not have paid the defendant's claims had Medicare known the hospitalizations were, in fact, unnecessary. Finally, the court held that the plaintiff's complaint plausibly alleged that the defendant submitted false claims.
FCA Claims Dismissed for Failure to Plead Fraud with Sufficient ParticularityNathan A. Adams IV
In United States ex rel. Integra Med Analytics, LLC v. Baylor Scott & White Health, No 19-50818, 2020 WL 2787652 (5th Cir. May 28, 2020), the court of appeals affirmed dismissal of the plaintiff's claims for failing to meet the pleading requirements of Federal Rule of Civil Procedure 8(a) and 9(b) for pleading the FCA's element that there be "a false statement or fraudulent course of conduct." In addition, the court determined that the plaintiff failed the plausibility standard at the pleadings stage. As background, the plaintiff alleged that Baylor Scott & White Health (Baylor) submitted $61.8 million in fraudulent claims to Medicare in violation of the FCA. In particular, the plaintiff claimed that Baylor fraudulently used higher-value complication or comorbidity codes (CCs) and major complication or comorbidity codes (MCCs) than were justified by actual medical diagnoses to increase its revenue. But the court ruled that the plaintiff failed the Rule 8(a) and 9(b) standard because its statistical analysis was equally consistent with Baylor being ahead of most healthcare providers in following new Centers for Medicare & Medicaid Service (CMS) guidelines. The plaintiff's data showed that the healthcare industry as a whole caught up to Baylor in a couple of years.
The plaintiff also alleged that Baylor trained its physicians to focus on key words to "upcode" MCCs; pressured physicians to alter their original diagnoses and asked them to specify or change their diagnosis if it did not include CCs or MCCs and provided unnecessary treatment in order to code high value MCCs. The court ruled that this was unsurprising because CMS expected hospitals to work with their physicians and medical coders to understand and implement the CC list. The plaintiff relied on the testimony of a former medical coder for Baylor who claimed she was pressured to code unethically, but her claims were wholly conclusory and provided no example of the alleged unethical or fraudulent directives. The court also was not impressed by the plaintiff's allegation that Baylor patients undergoing major heart surgery were put on a ventilator at a rate twice the national average. "These allegations do not withstand the heightened pleading requirements for fraud under Rule 9(b)."
In United States ex rel. Benaissa v. Trinity Health, No. 19-1207, 2020 WL 3455795 (8th Cir. June 25, 2020), the court affirmed summary judgment for the defendant regional healthcare system against the relator's claim that, by paying physicians for referrals in violation of the Stark Law and Anti-Kickback Statute (AKS), it violated the FCA by knowingly presenting a false or fraudulent claim to the government, making a false statement material to a false or fraudulent claim and retaliating against him. The court determined that the plaintiff's claims did not satisfy the particularity requirement. The relator, a trauma surgeon, admitted that he did not allege representative examples of false claims presented for payment or approval, lacked firsthand...
