The district court denied the defendants’ motion to dismiss a qui tam complaint alleging they fraudulently billed Medicare for services for which they were not entitled to reimbursement. The relator alleged the defendants billed Medicare for certain heart procedures, even though their facilities and physicians lacked the experience requirements documented in CMS’ National Coverage Determinations. The defendants argued that the NCDs are non-binding and therefore any violations were technical, not fraudulent. They also argued the Department of Justice had instructed its attorneys not to bring or join cases alleging violations of agency policy documents. However, the court found no authority stating that NCDs are non-binding and found numerous instances where other courts found that NCDs carry the force of law. Further, the court noted that DOJ guidance is not binding on the courts. Because the NCDs clearly stated that facilities and physicians who lacked certain experience requirements could not bill Medicare for the procedures at issue, the court held that the relator had pled a claim under the FCA.
Relator Dr. Donald Lynch M.D. filed a qui tam complaint alleging that the University of Cincinnati Medical Center and its affiliates billed government health insurance programs for procedures that were not medically necessary. The defendants moved to dismiss.
Relator Lynch worked for the defendants as a board-certified interventional cardiologist. He alleged that the hospital entities performed unnecessary transcatheter aortic valve replacement (TAVR) procedures. Medicare will pay for the procedures under specific criteria, including requirements for independent patient assessments from two cardiac surgeons and for specific post-operation care. TAVRs also may only be provided in a hospital with appropriate infrastructure and a specific level of experience performing these procedures. Further, physicians performing the procedures also must have specific relevant experience before their services can be billed to Medicare.
In 2014, Dr. Satya S. Shreenivas, M.D., was hired to lead UCMC’s structural heart program. By 2015, Shreenivas was concerned that the hospital did not meet the experience requirements for TAVR reimbursement under Medicare. Shreenivas made multiple inquiries and forwarded his findings to UCMC executives. According to the relator, these communications put UCMC on notice that the hospital did not qualify to bill Medicare for TAVR procedures because it did not meet the experience requirement. Once UCMC began performing TAVR procedures but before it submitted billings to Medicare, Dr. Shreenivas again informed his superiors that any billing to Medicare would be unlawful until UCMC performed enough procedures to qualify under the experience requirement. The relator provided evidence the hospital met approximately half the experience requirement by this time.
Nonetheless, UCMC allegedly began submitting invoices for reimbursement for TAVR procedures. According to the relator, Shreenivas and another physician resigned their positions due to concerns about the improper billing. The relator provided specific invoices he claimed were fraudulent under CMS guidelines. In his complaint, Lynch alleged UCMC submitted false claims for payment and false statements material to a false claim, and failed to reimburse the government for funds it received improperly.
The defendants moved to dismiss for failure to state a claim under the FCA and failure to state a claim with particularity. First, they argued that the guidance on TAVR reimbursement is not a duly promulgated regulation or statute, but only a guidance document intended to help providers determine medical necessity. Accordingly, they argued their violation was technical, not fraudulent. The defendants argued that the Department of Justice has instructed its attorneys not to bring or join FCA cases that turn on technical violations of agency guidance.
The defendants also argued that the original complaint lacked particularity because the case turned on alleged violations of a non-binding agency guideline and program guidance. They argued the relator failed to allege that there was an objective falsehood, that the cardiologists who performed the TAVRs were unqualified; or that the patients were not good candidates for TAVR. Finally, they argued the relator had not shown the non-compliance was material to the government’s decision to pay. Alternatively, the defendants argued the relator had not shown their claims for payment made any certifications about their compliance with CMS guidance.
In response, the relator argued the defendants submitted or caused to be submitted claims for reimbursement for TAVR procedures performed at UCMC that were not medically reasonable and necessary under and were therefore false. The relator argued the defendants certified their claims even though they understood they did not meet the experience requirements for reimbursement. According to the relator, the government would not have paid the claims had it known of the misrepresentation.
As a threshold matter, the defendants suggested the relator had abandoned the theory of FCA liability raised in his original complaint by presenting a different theory of FCA liability in the response to the motion to dismiss, which the relator is now bound to pursue. They argued that the relator articulated an implied certification theory of liability in the complaint which he has recast as an “express certification” theory of liability in his memorandum in opposition to their motion to dismiss. However, the court explained that it was not foreclosed from considering whether Lynch stated a claim for relief under the theory articulated in the complaint. The issue before the court in the motion to dismiss is whether Lynch had stated a claim based on some valid legal theory. Provided the claim withstands their defenses, his complaint should not be dismissed. Therefore, the court considered only whether Lynch had stated such a claim.
The court then turned to the defendants’ defenses. UCMC argued that the alleged violations were related to non-binding guidance and therefore could not form the basis of an FCA complaint. However, the court was not persuaded that CMS’ National Coverage Determinations are non-binding, as the authorities cited by the defendants did not address NCDs specifically. Rather, one case cited by the defendants addressed the non-binding nature of industry standards, while another did not connect NCDs to the FCA.
Also, the DOJ memorandum directing attorneys not to rely on agency guidance documents also did not address NCDs. Further, the court noted that DOJ policy does not bind the court. Finally, the court noted that other courts have rejected the supposition that NCDs are non-binding and cannot support an FCA claim. Rather, courts have interpreted NCDs as substantive rules, which carry the force of law. The court noted that holding otherwise would effectively authorize entities to violate NCDs when the terms are not included in a regulation or statute. The court therefore rejected the motion to dismiss on this basis.
Next, the defendants argued that the relator never alleged they actually submitted or caused to be submitted any false claims. They argued that, at a minimum, the FCA requires proof of an objective falsehood. They asserted that the relator’s claim is not “false” under the FCA because he did not allege they billed for services that were never provided, billed for fictitious patients, or billed based on forged or falsified documents. The court rejected this argument as unsupported. Further, even assuming an objective falsehood were required, the court held the relator had made such an allegation, because he asserted the defendants billed for services that were disallowed under the NCD due to their failure to meet the experience requirements.
Finally, the defendants argued the relator had not shown the violations were material to the government’s decision to pay, but had only alleged that the United States might be entitled to decline payment. The court disagreed, finding the relator alleged the defendants violated the terms of the NCD and that compliance with the NCD was material. The NCD specifically limited payments for TAVR services to facilities and physicians that met the experience requirements. Therefore, the court agreed that compliance was material.
Defendant University of Cincinnati Physicians, an entity connected to UCMC, moved to dismiss, arguing that it was improperly named and that the relator had not satisfied the “presentment” pleading requirement as to UCP; had not satisfied the “scienter” pleading requirement as to UCP; and had not pled his claims with the required “particularity” as to UCP. UCP argued it had not been linked to any false claim and that the conspiracy allegations lacked specificity. Generally, UCP argued that the relator had unfairly lumped together the affiliated entities when making his allegations.
In the amended complaint, the relator claimed that UCP was his direct employer and that UCP leases physicians to defendant UC Physicians, which submitted the false claims at issue, based on the allegations presented above. The relator argued that he was not required to attach a copy of a claim to his complaint but needed only to plead facts sufficient to create a strong inference. Lynch alleged that he had pled sufficient facts by identifying the fraudulent scheme; the defendants and their agents’ knowledge of the scheme; the specific patients who underwent the TAVR procedures; when the TAVR procedures were performed; and each defendant’s submission of a request for payment to the government for Part A facility fees and Part B professional fees. The relator argued he did not have to submit a claim, because he had demonstrated that the defendants could not meet the NCD requirements, and therefore any clam for TAVR procedures was necessarily false.
The court agreed the relator had alleged facts strongly suggesting that actual false claims in all likelihood existed and had been presented to the government for payment by UCP. The relator identified specific TAVR procedures performed at UCMC during the relevant time period that were billed to the government; made allegations and submitted an email chain involving UCP and UCMC officials concerning Dr. Shreenivas’ failure to complete the note to bill the government; and submitted his employment agreement indicating that UCP was an entity which was assigned billing responsibilities for UCP physicians. These allegations, when coupled with the allegations that UCP presented or caused to be presented claims for reimbursement relating to TAVR procedures that did not meet the NCD criteria for payment, created a strong inference that UCP presented or caused to be presented false claims for payment to the government and satisfied the relator’s burden to plead his fraud claims against UCP with particularity. The court also found the facts sufficient to plead scienter.
