The district court granted in part the defendants’ motion for summary judgment in a healthcare fraud case, finding that the relator had not shown that billing for services in excess of a state program’s patient budget cap would result in the state denying or recouping payment. Rather, when patients exceeded their budget caps for certain programs, they would be reassessed and moved to another healthcare program. The court also found no evidence that physician signatures on forms were material to the state’s decision to pay claims, provided that physicians actually authorized the relevant care. However, the court denied summary judgment on a portion of the claim arguing the defendants billed the state Medicaid program without first billing liable third parties, including Medicare, as state and federal regulations stated that payments would be denied or recouped for this failure, meaning the requirement was material.
Relator June Raffington filed a qui tam complaint alleging that Bon Secours Health System Inc., Bon Secours New York Health System, and Schervier Long Term Home Health Care Program submitted false claims to Medicare and the New York Medicaid program. The defendants moved for summary judgment, arguing the relator could not show that any of the allegedly conduct was material to the programs’ payment decisions.
The defendants made three arguments. First, they argued that no reasonable jury could find that submitting claims in excess of patient-specific budgets, or for services provided to patients who were not yet approved for enrollment in Schervier’s Long Term Home Health Care Program, could be material to the New York State Department of Health’s decision to pay those claims.
The court noted the relator did not respond to the issue of patients not yet enrolled, and so considered it unopposed. Therefore, it considered only the treatment of claims submitted in excess of patient-specific budgets. The LTHHCP program incorporates a legally mandated monthly budget cap for each level of care, taking into account the average cost of nursing facility care in each county. For most individuals, the cap is set at 75 percent of the cost of care at a residential healthcare facility. For individuals with special needs, the cap is 100 percent, and for residents of adult care facilities, the cap is 50 percent. For an individual to be eligible for the LTHHCP program, a facility must be able to provide care to the individual within the budget cap. If a budget determination concludes that the cost of care exceeds the cap, staff must refer the individual to other resources.
The court noted that the relator did not allege that services were not provided, only that services were provided in excess of the budget caps. First, the court found that the program’s rules anticipate that the cost of care could fluctuate and therefore exceed a patient’s budget, and therefore allowed overages up to 10 percent above the cap. Therefore, the court reasoned that any billing that exceeded the monthly budget by less than 10 percent was plainly not material to the state’s decision to pay those claims. The program also allows payments that exceed the budget caps by more than 10 percent, with prior approval. Therefore, when a prior approval is obtained, the fact that claims are over budget would not be material to a payment decision. The program also allows patients to use credits accrued from prior months when costs were below budget, and allows for annualization to account for fluctuations in monthly billings.
Accordingly, the court did not accept the relator’s blanket statement that the New York Department of Health would not pay for any services when monthly patient budgets were exceeded. The court then considered whether the relator had submitted evidence of over-budget billings that did not fall into one of the above exceptions.
Raffington argued that New York state regulations require monthly budgets and that care must be appropriately authorized. However, the court noted that neither of these provisions state that the government will deny or recoup payments that exceed the monthly budget for a patient. Even sections that placed conditions on payments did not necessarily suggest materiality, the court noted. For example, while the rules require that care be authorized under relevant rules, the term “authorization” is vague.
Next, Raffington argued that the LTHHCP manual requires additional reviews for individuals who exceed their monthly budget caps by more than 10 percent for two consecutive months and who have used their accrued credits, to determine if the individual is still eligible for care under the program. However, again, the court found no language stating that payment would be denied in such cases, should care continue, but rather that patients would be disenrolled from the program. While the government may review the program and disenroll patients before moving them to another program, the court found no evidence the government denied or recouped payments made prior to a disenrollment. While the relator argued the government would terminate the patient’s participation, the court noted that action would block future payments, while not addressing payment for services already rendered.
The relator cited to other program provisions she argued provided evidence of the materiality of compliance with budget mandates, but the court still found no language stating that payments would be denied or recouped. Further, where the manual stated that the state “may” disallow certain payments, the court did not find this satisfied Escobar’s materiality threshold.
Further, the defendants pointed to evidence showing that when budget caps were exceeded, the state would contact providers for a budget modification or patient reassessment, but would not deny claims for services already rendered.
The relator argued that the misrepresentation did not have to be so grievous that the government would have completely denied payment upon discovering the truth, but only serious enough to affected the payment decision. However, the court again found no evidence suggesting budget compliance ever affected a decision to pay.
The relator argued that the defendants’ internal communications suggest they understood that budget compliance was material to the government’s decision to pay, but the court found the defendants’ beliefs were less material than the government’s. Further, none of the communications cited by the relator demonstrated the government denied claims or was likely to deny claims based on budget compliance.
The relator also argued that the defendants could not show the state government had knowledge of their submission of bills in excess of the budget caps, but the court explained it is the relator’s burden to prove materiality and therefore she cannot fault the defendants for failing to produce evidence that supports its own position. Further, while the defendants have no burden of proof, they point to several instances in which state agencies identified and discussed patients who were over budget, but did not suggest payments would be denied or recouped.
The court granted the defendants’ motion for summary judgment on this issue.
Next, the defendants argued that no reasonable jury could find that the “Medicare Maximization” practices alleged by Raffington, if true, would be material to the NYS DOH’s decision to pay claims. The relator argued the defendants violated state regulations and the FCA by billing Medicaid for all services provided to dual-eligible patients, instead of billing Medicare for acute care services.
The court noted that Medicaid is the “payer of last resort” and that state regulations require providers to bill all other eligible payers before submitting claims to the state. In this case, the regulations state that payments could be denied or recouped if a provider fails to follow this billing hierarchy. Because the relator alleged that the defendants knowingly submitted claims without first attempting to bill Medicare, and shown that the state would not make or would recoup these payments, the court found she’d adequately pled materiality.
The defendants argued that the audits in fact showed that the government knew they were not “regularly” billing Medicare prior to billing Medicaid and that the defendants were making appropriate billing decisions in many cases. However, the court noted the defendants did not contest that in cases in which a claim was appealed to Medicare and Medicare paid the claim, that the NYS DOH would recoup the payment that Medicaid had already made. The court found no evidence the defendants had specifically disclosed their billing practices to the state and rejected the defendants’ assertion that the state’s decision not to intervene undermined the relator’s case for materiality. The court declined to assume the state’s reasoning for its decision not to intervene. Accordingly, the court denied the motion for summary judgment on this issue.
Finally, the defendants argued that a forged or missing signature on certain documents would not have been material to the government’s decision to pay claims associated with those forms. The relator alleges that the defendants’ employees routinely forged physician signatures in an effort to prepare claims for billing after regularly waiting unreasonably long periods before attempting to obtain the requisite physicians’ signatures. The relator argued that physician authorization is material to the state’s decision to pay.
In response, the defendants argued that the relator did not allege that any claims lacked physician authorization, only that employees may have signed forms that authorizing physicians had neglected. However, the court found it need not reach a decision on the question of whether a claim of a lack of physician authorization is stated in the complaint, as the defendants moved for summary judgment on the materiality of the missing signatures. For the purpose of the motion, the court assumed that authorizations were in fact provided, and only the actual signatures were missing.
The court found scant evidence that the actual signatures on forms—when authorization was otherwise obtained—were material to payment decisions by the state or Medicare. The court also found the relator provided no evidence of how the state handled claims when it was aware a signature was missing or had been written by someone else. Accordingly, the court granted summary judgment to the defendants on this issue as well.