United States v. Chattanooga-Hamilton Cnty. Hosp. Auth.

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UNITED STATES OF AMERICA and THE STATE OF TENNESSEE, ex rel. JULIE ADAMS, M.D., STEPHEN ADAMS, M.D., and SCOTT STEINMANN, M.D., Plaintiffs, v. CHATTANOOGA-HAMILTON COUNTY HOSPITAL AUTHORITY et al. Defendants.

No. 1:21-cv-84

United States District Court, E.D. Tennessee, Chattanooga

January 19, 2024

Susan K. Lee, Magistrate Judge.

MEMORANDUM OPINION

TRAVIS R. MCDONOUGH, UNITED STATES DISTRICT JUDGE

Before the Court is Defendant Chattanooga-Hamilton County Hospital Systems, doing business as Erlanger Medical Center and Erlanger Health Systems' (“Erlanger”), motion to dismiss (Doc. 117). For the reasons set forth below Erlanger's motion (id.) will be GRANTED IN PART and DENIED IN PART.

I. PLAINTIFFS' ALLEGATIONS AND PROCEDURAL POSTURE

A. The Parties

Erlanger is a non-profit, regional health system that operates seven hospitals in Tennessee, North Carolina, and Georgia. (Doc 51, at 19.) This includes Erlanger Baroness Hospital, an academic teaching hospital, with approximately 150 residents and fellows participating in graduate-level training. (Id. at 19-20.) Erlanger is affiliated with University of Tennessee Health Sciences Center College of Medicine (“UTCOM”) and is the primary UTCOM campus in Chattanooga. (Id. at 19.)

Defendant Plastic Surgery Group (“PSG”) is a limited liability company that contracts with Erlanger to provide services to its patients. (Id. at 21.) Defendant University Surgical Associates, P.C., (“USA”) is a Tennessee corporation, the physicians of which have admitting and surgical privileges at Erlanger. (Id.) USA surgeon Dr. Phillip Burns sat on the Erlanger Board of Trustees (“Erlanger Board”). (Id. at 22.) Defendant Anesthesiology Consultants Exchange, P.C., (“ACE”) is a Tennessee corporation that is the sole provider of anesthesia services at Erlanger, including for surgical procedures. (Id. at 21.) ACE anesthesiologist Dr. Christopher Young sat on the Erlanger Board. (Id.)

Plaintiffs are physicians whom Erlanger formerly employed. (Id. at 6.) Dr. Julie Adams was an orthopedic surgeon at Erlanger and a Professor of Orthopedic Surgery at UTCOM from July of 2019 until March of 2021. (Id. at 16-17.) Dr. Stephen Adams became the Chief Medical Informatics Officer at Erlanger in 2014 and later served as the Chief Information Officer at Erlanger from December 2019 until June 2021. (Id. at 16.) He was also a professor in the Department of Family Medicine at UTCOM. (Id. at 15). Dr. Scott Steinmann was a surgeon at Erlanger and served as Chair of the UTCOM Department of Orthopedic Surgery from 2019 until July 2021. (Id. at 18-19.)

B. Medicare's Teaching Physician Regulations

The Medicare Program is a federal health-insurance program for Americans aged 65 and older, as well as some people with disabilities. (Id. at 24.) To participate in the Medicare Program, hospitals must enter into “Provider Agreements” with the United States Department of Health and Human Services (“HHS”). 42 U.S.C. § 1395cc. Under these agreements, a hospital submits claims to HHS for reimbursement for services it provides to Medicare beneficiaries. (Doc. 51, at 26-27.)

In teaching hospitals, resident physicians often participate in providing services under the supervision of teaching physicians. (Id. at 27.) However, Medicare regulations only allow payment for teaching-physician services if the teaching physician personally provided the services, or if a resident provided the services while the teaching physician was present. 42 C.F.R. § 415.170. Furthermore, “in the case of surgical, high-risk, or other complex procedures, the teaching physician must be present during all critical portions of the procedure and immediately available to furnish services during the entire service or procedure.” Id. § 415.172(a)(1). If the teaching physician engages in two surgeries that overlap, she can only leave the first surgery once the critical portions are completed. Dep't of Health & Hum. Servs., Medicare Claims Processing Manual Ch. 12, at § 100.1.2.A.2 (2019) (hereinafter, “Medicare Claims Processing Manual”). Even then, the teaching physician must designate another qualified physician to be available to assist the resident during the non-critical portions of the procedure. Id.

C. Plaintiffs' Allegations

Plaintiffs allege that, in the course of their employment at Erlanger, they became aware teaching physicians were frequently permitted to conduct multiple resident-involved surgeries at the same time while submitting claims for the surgeries to Medicare as if the teaching physicians were present for the duration of each surgery.^[1] (Doc. 51, at 38.) Plaintiffs learned that it is a “long entrenched tradition” for surgeons to operate in this way at Erlanger. (Id. (internal quotations omitted).) Dr. Stephen Adams became personally involved “in data extraction for the purpose of analyzing overlapping surgeries.” (Doc. 52, at 1.) Furthermore, Doctors Steinmann and Julie Adams witnessed teaching physicians “book[ing] two and sometimes three overlapping surgical cases . . . with the same teaching physician listed on each surgery.” (Id.) Teaching physicians often scheduled the overlapping surgeries in different buildings, making it impossible for them to be “immediately available” if something went wrong with the resident-performed surgery. (Id. at 6.) Plaintiffs also learned that “Erlanger did not require that qualified back-up surgeons be designated to be immediately available to assist residents when their teaching physicians were participating in another surgery” and were told by Dr. Christopher Young, Erlanger Chief of Staff and a member the Erlanger Board of Trustees (“Erlanger Board”), that “Erlanger [does not] even comply” with the back-up surgeon requirement. (Id. at 2.) As a result of these practices, residents were left alone to conduct some or all of these surgeries without supervision. (Id.)

Plaintiffs identified claims submitted to the Government for 8,497 overlapping surgeries between 2017 and 2021.^[2] (Id.) From this total, Plaintiffs identified ten examples of overlappingsurgery claims submitted by Erlanger to the Government. (Id. at 9-27.) These examples included the time and date of the surgeries for which claims were submitted, the type of surgery performed, the names of the surgeons who performed the surgeries, the amount of the claims, the date the claims were sent to the Government, and the date Erlanger received the payments. (Id.)

Plaintiffs also became aware that there was a “culture of non-compliance” with Medicare billing requirements at Erlanger. (Doc. 53, at 2.) Plaintiffs discovered a litany of violations of Medicare billing rules, including medically unnecessarily long periods of patients being anesthetized (Doc. 52, at 27), inadequate recordkeeping during surgeries (id. at 30), password sharing by physicians (Doc. 53, at 5), patients being admitted by non-physicians (id. at 17), patient test results not being reviewing by physicians (id. at 18), and the fabrication of patient physical examinations pre-surgery (id. at 21). Plaintiffs also allege they discovered that Erlanger improperly incentivized physicians to refer patients to Erlanger by offering them “excessive salaries and benefits” in violation of the Stark Law (“Stark”) and Anti-Kickback Statute (“AKS”), 42 U.S.C. § 1395nn; 42 U.S.C. § 1320a-7b(b). (Doc 53, at 24.)

Over the course of many months, Plaintiffs raised their concerns about these alleged practices on multiple occasions with senior Erlanger leadership, including with Erlanger CEO Dr. William Jackson and Erlanger's Chief Compliance Officer, Julie Dean. (Doc. 54, at 14.) Plaintiffs notified them about a variety of issues including “billing and coding errors, professionalism issues, scope of practice, violations of Erlanger policy, and potential violations of federal statutes.” (Id.) Plaintiffs also submitted an “e-safe report” detailing their concerns. (Id. at 21.) An e-safe report is intended to be a confidential means of raising concerns with Erlanger's Medical Executive Committee. (Id. at 22.) However, Plaintiffs allege that Erlanger Leadership gained access to the contents of the report. (Id.) Soon after Plaintiffs raised these concerns, Erlanger began to take adverse action against them. (Id.) The day after Plaintiffs submitted their e-safe report, CEO Jackson spoke to the Erlanger Board and argued that Plaintiffs represented a “threat to the enterprise.” (Id.) Shortly after this meeting, on March 29, 2021, Erlanger terminated Dr. Julie Adams and Dr. Steinmann without cause, which put them in danger of losing their academic positions at UTCOM since “maintaining membership with Erlanger” was a condition of their employment. (Id. at 22, 24.) Dr. Stephen Adams was threatened with termination and a reduced salary and ultimately resigned in the face of these threats. (Id.) He also was banned from participating in resident education. (Id. at 25.) Dr. Julie Adams and Dr. Steinmann have searched for other positions at teaching hospitals but have not been able to find employment due to Erlanger's continuing campaign of retaliation aimed at assassinating their characters. (Id. at 24.)

Plaintiffs initially filed this action on April 20, 2021. (Doc. 1.) Plaintiffs then filed an amended complaint on January 5, 2023. (Docs. 51-54.) Plaintiffs assert ten claims for violations of the Federal False Claims Act (“FCA”) and the Tennessee Medicaid False Claims Act (“Tennessee FCA”):

1. 31 U.S.C. § 3729(a)(1)(A); (Count I: Presentment of False Claims)

2. 31 U.S.C. § 3729(a)(1)(B); (Count II: False Records)

3. 31 U.S.C. § 3729(a)(1)(C); (Count III: Conspiracy)

4. 31 U.S.C. § 3729(a)(1)(G); (Count IV: Reverse False Claims)

5. 31 U.S.C. § 3730(h); (Count V: Retaliation)

6. Tenn. Code. Ann. §

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