United States ex rel. Montcrieff v. Peripheral Vascular Assocs., P.A.

649 F.Supp.3d 404

UNITED STATES of America, EX REL.; Tiffany MONTCRIEFF, Relator;Roberta A. Martinez, Relator; and Alicia Burnett, Relator, Plaintiffs v. PERIPHERAL VASCULAR ASSOCIATES, P.A., Defendant.

SA-17-CV-00317-XR

United States District Court, W.D. Texas, San Antonio Division

Signed January 9, 2023

John Deck, U.S. Attorney's Office, San Antonio, TX, Thomas Arthur Parnham, Jr., United States Attorney's Office, Austin, TX, for Plaintiff United States of America.

Adam M. Shapiro, Pro Hac Vice, Justin T. Berger, Sarvenaz J. Fahimi, Pro Hac Vice, Cotchett Pitre & McCarthy LLP, Burlingame, CA, Wallace M. Brylak, Jr., Brylak & Associates, San Antonio, TX, for Plaintiffs Tiffany Montcrieff, Roberta A. Martinez, Alicia Burnett.

Jeff J. Wurzburg, Norton Rose Fulbright U.S. LLP, San Antonio, TX, Mark A. Cole, Pro Hac Vice, Spencer Fane LLP, Overland Park, KS, Sean R. McKenna, Spencer Fane LLP, Dallas, TX, Colin P. Goodman, Lauren Margaret Nelson, Spencer Fane, LLP, Houston, TX, for Defendant.

ORDER

XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE

On this date, the Court considered (1) Defendant's renewed motion for judgment as a matter of law (ECF No. 208), Relators' response (ECF No. 214), and Defendant's reply (ECF No. 217); and (2) Relators' motion for statutory penalties and entry of judgment (ECF No. 207), the responses filed by Defendant (ECF No. 215) and the United States (ECF No. 216), and Relators' replies thereto (ECF No. 218, 219).

BACKGROUND

This False Claims Act case arises out of the alleged fraudulent billing practices of Defendant Peripheral Vascular Associates, P.A. ("PVA"), a healthcare provider. Relators filed this action in April 2017 under the authority granted by 31 U.S.C. § 3730(b), which authorizes private persons to sue for violations of the False Claims Act, 31 U.S.C. §§ 3729 et seq. ("FCA"), on behalf of the United States Government. Relators allege that PVA falsely billed Medicare for services it had not performed. See ECF No. 8. After a five-day trial held in February 2022, the jury agreed, awarding $2,728,199 in damages. ECF No. 201. Relators now ask the Court to assess statutory penalties against PVA consistent with the jury's verdict. ECF No. 207. PVA asks the Court to set aside the jury verdict. ECF No. 208.

PVA is a full-service vascular surgery practice with multiple locations throughout San Antonio, Texas. ECF No. 123 at 2. Among other services, PVA performs vascular ultrasounds, which have two components relevant to this case: a technical component and a professional component. Id. In essence, the technical component is performing the ultrasound and the professional component is a physician analyzing the results. Id.

The technical and professional components of a vascular study can be billed to Medicare (or any other payor) separately or jointly. Id. Which provider bills a particular component of a vascular study depends on who performs which component. Id. at 3. PVA physicians read and interpret studies performed at PVA offices and at hospitals. Id. at 3-4. When a hospital performs the technical component of a study, the hospital bills for that component. Id. at 4. When a PVA physician or registered vascular technologist performs the technical component, PVA bills for that component. Id. PVA performs some vascular studies without a PVA physician seeing or treating the patient. Id. These "Testing Only" studies occur when PVA performs the technical component of a vascular study ordered by a different treating provider. Id.

A healthcare provider can bill Medicare for both the technical and professional components of a vascular study using a "global" Current Procedural Terminology ("CPT") Code. Id. The CPT Codes are a series of alphanumeric sequences—developed by the American Medical Association ("AMA") and adopted by the Department of Health and Human Services ("HHS")—that healthcare providers use to describe the procedures and services that they perform. ECF No. 123 at 2-3. When a provider bills for just one component of a study, it must use a two-character "modifier" that signifies that only one component has been performed. Id. As relevant here, a provider can append the "-TC" modifier when billing the technical component only, or the "-26" modifier to bill for the professional component only. Id.

PVA uses a program called Allscripts Clinical Module ("Allscripts CM") as its electronic medical records system and a program called Allscripts Practice Management ("APM") as its billing software. Id. ¶¶ 17, 22. A patient's medical record is contained in Allscripts CM. In 2014, PVA adopted an archiving and communications system called MedStreaming. Id. at 5. The purpose of this system was to help PVA physicians manage workflow and to create a reporting system that was easier for healthcare providers and patients to understand. Id. Every vascular study that PVA performs has a MedStreaming report. Id.

Relators filed their initial Complaint under seal in April 2017, ECF No. 1, followed by an Amended Complaint, filed under seal in December 2017, ECF No. 8. Relators brought this action under 31 U.S.C. § 3730(b), which authorizes private persons to sue for violations of the FCA on behalf of the United States Government. Relators alleged, inter alia, that, in 2012, PVA implemented a scheme of too-quick billing designed to increase revenue. Id. ¶¶ 36-38. Specifically, PVA began billing Medicare for both the professional and technical component before the patient's status became "Final" in MedStreaming—before the PVA physician had reviewed and interpreted the study and signed the report. Relators alleged three tranches of claims, representing three separate theories of liability under the FCA.

(1) The "Testing Only" Tranche: The Testing Only Tranche includes vascular studies that PVA performed based on referrals from non-PVA healthcare providers. When a patient is referred to PVA only for a vascular study, PVA does not perform Evaluation, Management, or Treatment Services ("E/M Services"). For these patients, there are no encounter notes in the patient's medical record in Allscripts CM. Accordingly, a PVA physician's interpretations appear only in the MedStreaming reports. Relators assert that PVA billed Medicare before the MedStreaming report was signed.

(2) The "Double Billing" Tranche: The Double-Billing Tranche contemplates services PVA provided to its own patients. For these patients, PVA physicians would visit with a patient to provide E/M Services and then order a vascular study to be conducted on the same day. Relators argue that PVA failed to generate a MedStreaming report to reflect the PVA physicians' interpretations of vascular studies. Although PVA argues that the physicians' interpretations are found in the Allscripts CM E/M Services patient note, Relators assert that the CPT definitions explicitly prohibit billing for both E/M Services and a vascular study without a separate, written report containing the physician's interpretations.

(3) The "Wrong Provider" Tranche: Relators allege that PVA submitted bills to Medicare indicating the wrong "rendering" physician because PVA used a system that allowed any PVA physician to review and sign MedStreaming reports regardless of whether that physician performed the interpretation.

The Department of Justice investigated the Relators' allegations for roughly a year. Over the course of the investigation, PVA provided thousands of pages of medical and business records pursuant to a Government subpoena, including over 400 patient records covering a three-year period. On August 22, 2018, Katherine Britt, PVA's vice president of operations, met for an hour and a half with special agents from the Office of the Inspector General ("OIG") of the Department of Health and Human Services ("HHS") to discuss PVA's Medicare billing practices and explain the documents provided in response to the subpoena. Three months later, the Government informed the Court of its decision to decline to intervene in Relators' case. ECF No. 20.

In August 2020, the parties filed cross-motions for summary judgment. ECF Nos. 94, 95. On December 14, 2020, the Court issued an order resolving the parties' cross-motions for summary judgment. See United States ex rel. Montcrieff v. Peripheral Vascular Assocs., P.A., 507 F. Supp. 3d 734, 759-60 (W.D. Tex. 2020). As is relevant here, the Court granted Relators' motion with respect to the falsity and scienter elements of their claims, concluding that the issues of materiality and damages would be tried to the jury. See id. at 773.

A five-day trial was held in February 2022. After the close of Relators' case and then again before submission to the jury, PVA moved for judgment as a matter of law, arguing that Relators had not satisfied their burden of proof as to materiality or damages, and had failed to introduce any evidence relating to payments made by the Medicare Advantage and Tricare programs, which have their own rules for payment. See ECF Nos. 196, 197. The Court concluded that Relators had failed to present sufficient evidence that designation of the wrong provider on PVA's invoices was material to the Government and, accordingly, granted PVA's motions with respect to the Wrong Provider Tranche of Claims. Trial Tr. at 660:1-4. The Court also granted judgment as a matter of law as to the claims arising out of payments by the Medicare Advantage and Tricare programs. Id. at 672:3-8. The motions were denied in all other respects. ECF No. 199.

Pursuant to the Court's rulings narrowing the case, Relators asked the jury to find 2,780 false claims within the Testing Only Tranche and 4,650 within the Double Billing Tranche. Trial Tr. 772:10-8. On February 16, 2022, the jury returned a verdict in favor of Relators, but deducted 25 claims from each tranche.¹ ECF No. 201. In total, the jury found that PVA had submitted 7,380 false claims, causing $2,728,199 in damages to the Government. Id. Trebled, the damages awarded by the jury total...