United States ex rel. Forcier v. Computer Scis. Corp.

183 F.Supp.3d 510

United States of America and The State of New York ex rel. Vincent Forcier, Plaintiffs,

v.Computer Sciences Corp. and The City of New York, Defendants.

12–CV–1750 (DAB)

United States District Court, S.D. New York.

Signed April 28, 2016

Jay Scott Speers, New York State Office of the Attorney General, Konrad Francis Payne, Harris Beach, PLLC, New York, NY, Robert Lawrence Vogel, Shelley R. Slade, Vogel, Slade & Goldstein, LLP, Janet Lyn Goldstein, Vogel, Slade & Goldstein, Washington, DC, Li Yu, Rebecca C. Martin, New York, NY, for Plaintiffs.

Bret A. Finkelstein, Jessica Rubin Caterina, Marcus Aaron Asner, William H. Voth, Arnold & Porter, LLP, Emily Stern, Joseph Victor Willey, Scott Andrew Resnik, Katten Muchin Rosenman, LLP, Stephen Edward Kitzinger, New York City Law Depart. Office of the Corporation Counsel, New York, NY, for Defendants.

MEMORANDUM AND ORDER

DEBORAH A. BATTS, United States District Judge.

In this qui tam action, Relator Vincent Forcier ("Relator") alleges that Defendants the City of New York (the "City") and Computer Sciences Corporation ("CSC")¹ violated the federal False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq., and the New York False Claims Act ("NY FCA"), N.Y. FINANCE LAW §§ 187 et seq., by submitting false claims to Medicaid for reimbursement. The United States (the "Government") and the State of New York (the "State," and together with the Government, "Plaintiffs") have both elected to intervene.

The City and CSC have moved to dismiss the Government's Complaint–in–Intervention (the "U.S. Compl."), New York's Complaint–in–Intervention (the "N.Y. Compl."), and the Relator's Second Amended Complaint ("SAC" or "Relator Complaint"). For the reasons that follow, the motions are DENIED in part and GRANTED in part.

I. FACTUAL BACKGROUND

A. Statutory and Regulatory Framework

The Individuals with Disabilities Education Act, 20 U.S.C. §§ 1400 et seq. ("IDEA"), was enacted out of a need to, inter alia, "enhance the development of infants and toddlers with disabilities ... [and] minimize their potential for developmental delay." Id. § 1431(a)(1). To that end, it provides federal funding to states "develop and implement a statewide ... interagency system" to provide "early intervention services" for children under three years of age who are experiencing developmental delays or who have "a diagnosed physical or mental condition that has a high probability of resulting in developmental delay." Id. §§ 1431(b)(1), 1433(5)(A). Federal IDEA funding is available to states only to the extent that the costs of evaluation and care for eligible children are not paid for by other sources, including private insurance and Medicaid.² Id. § 1440.

In accordance with the IDEA, New York State created the Early Intervention Program ("EIP") to provide services to eligible children and designated the Department of Health ("DOH") as the "[l]ead agency." N.Y. PUB. HEALTH L. § 2541(12). New York's EIP specifies the process by which children are evaluated for eligibility and an individualized family service plan ("IFSP") is developed for those children found to be eligible. Id. §§ 2544–45. The EIP provides for municipalities to pay service providers directly and assume responsibility for seeking reimbursement. (U.S. Compl.¶¶ 27–28.) In that circumstance, "for the purpose of seeking payment from [Medicaid] or from other third party payors, the municipality shall be deemed the provider of such early intervention services to the extent that the provider has promptly furnished to the municipality adequate and complete information necessary to support the municipality billing." Id. § 2559(3)(a).³

During all times relevant here, the City assumed responsibility for paying service providers for EIP services rendered to eligible children pursuant to an IFSP within New York City⁴ and seeking reimbursement from private insurance, Medicaid or the State's EIP program. (U.S. Compl.¶ 48.) State EIP regulations require municipalities, "in the first instance and where applicable, [to] seek payment from private third party insurers, prior to claiming payment from Medicaid or the Department of Health, for services delivered to eligible children and their families." 10 N.Y.C.R.R. § 69–4.22(a). Those costs not covered by private insurance or Medicaid were shared equally by the State and the City. N.Y. PUB. HEALTH L. § 2557(2) ("[DOH] shall reimburse the approved costs paid by a municipality ..., other than those reimbursable by [Medicaid] or by third party payors, in an amount of fifty percent of the amount expended.").

Medicaid is a federal program that provides medical care to eligible individuals, including families with low incomes and persons with certain disabilities, by reimbursing states for health care provided under its auspices. 42 U.S.C. § 1396 et seq. Subject to federal approval and review, states are responsible for establishing and administering their own Medicaid plans, abiding by federal guidelines and paying health care providers for the services they render. State Medicaid plans must in turn seek reimbursement for a portion of their expenditures from the federal Centers for Medicare and Medicaid Services. (N.Y. Compl. ¶ 27.)

Central to the claims asserted by the Government and the State is what they term Medicaid's "secondary payor requirement." (See U.S. Compl. ¶¶ 35–42; N.Y. Compl. ¶¶ 29–37.) In general terms, the requirement means that "Medicaid [does] not pay claims for which third parties [a]re liable." (U.S. Compl. ¶ 36; see N.Y. Compl. ¶¶ 29–30.) Here, Plaintiffs allege that it "required the City and CSC to exhaust private insurance coverage before submitting claims to Medicaid." (U.S. Compl. ¶ 2.) Plaintiffs premise this on: (1) federal and state Medicaid regulations; (2) New York Medicaid manuals and DOH guidance; and (3) Medicaid Certifications that the City and CSC were required to execute on an annual basis.

Federal Medicaid regulations require that states "must take reasonable measures to determine the legal liability of the third parties who are liable to pay for services" furnished under each state's plan. 42 C.F.R. § 433.138(a) ; 42 U.S.C. § 1396a(25). New York Medicaid regulations, in turn, require providers "[a]s a condition of payment, ... [to] take reasonable measures to ascertain the legal liability of third parties to pay for medical care and services." 18 N.Y.C.R.R. § 540.6(e)(1). The regulations further provide that "[n]o claim for reimbursement shall be submitted unless the provider has":

(i) investigated to find third-party resources in the same manner and to the same extent as the provider would to ascertain the existence of third-party resources for individuals for whom reimbursement is not available under the medical assistance program; and

(ii) sought reimbursement from liable third parties.

Id. § 540.6(e)(2). Although providers were required to submit claims to the state Medicaid plan within 90 days of the care being provided, an exception to that rule was provided for "circumstances outside of the control of the provider," including "attempts to recover from a third party insurer." Id. § 540.6(a)(1).

New York regulations further specify steps that Medicaid providers are required to take. Providers are required to: request from the patient "any resources available to pay for medical care and services," id. § 540.6(e)(3)(i); "investigate the possibility of making a claim" to any potentially liable third party and make any "reasonably appropriate" claims, id. § 540.6(e)(3)(iv); continue to investigate sources of third-party reimbursement after submitting a claim to Medicaid "to at least the same extent that such investigations ... would occur in the absence of reimbursement" by Medicaid, id. § 540.6(e)(3)(iii); and, "take any other reasonable measures necessary to assure that no claims are submitted to [Medicaid] that could be submitted to another source of reimbursement," id. § 540.6(e)(3)(v).

The Government additionally alleges that New York Medicaid provided guidance that emphasized the secondary payor requirement. First, New York Medicaid's Provider Manual for General Policy stated that Medicaid will pay for care "only after all [private insurance] resources available for payments have been exhausted," and that private insurance payments "must be received" before submitting a claim to Medicaid. (U.S.Compl.¶ 40.) Further, New York Medicaid's Provider Manual for Third Party Information advised participants that private insurance "must be utilized for payment ... prior to submitting claims to the Medicaid Program." (Id. ) The Government also alleges that, in 2003, DOH "issued guidance directed to municipal EIP officials" instructing that, in the event of a "technical error" like an "incorrect policy number" in a claim submitted to private insurance, municipal officials were required to correct the error and resubmit the claim to private insurance before submitting the claim to Medicaid. (Id. )

Finally, Plaintiffs rely on the annual Medicaid Certifications executed by the City and CSC. New York requires any person or entity seeking to submit claims for reimbursement to the state Medicaid plan to enroll as a provider. 18 N.Y.C.R.R. § 504.1(a)(1) ; see id. § 504.9 (requiring billing services to enroll as Medicaid providers). Enrolled providers are required, prior to submitting claims and annually in order to remain enrolled as a provider, to execute a Certification Statement ("Medicaid Certification"). (U.S. Compl. ¶ 43; N.Y. Compl. ¶¶ 43–52; see U.S. Compl. Ex. A (2009 City Medicaid Certification); id. Ex. B (2010 CSC Medicaid Certification).) The Medicaid Certification states, inter alia :

• "[N]o part of [any claim] has been paid by, or to the best of my knowledge is payable from any other source other than [Medicaid]."

• "ALL STATEMENTS, DATA AND INFORMATION TRANSMITTED

ARE TRUE, ACCURATE AND COMPLETE TO THE BEST OF MY KNOWLEDGE; NO MAERIAL FACT HAS BEEN OMITTED; I UNDERSTAND THAT

...