The district court granted the defendant’s motion to dismiss a qui tam action alleging fraud on Medicare. The relator alleged the defendant submitted incorrect billing codes to bill for more complex services than were provided; to bill for services that were never rendered; and to double-bill for services under two separate codes. However, while the relator presented copies of patient billing statements allegedly showing the outcome of the scheme, the court found he failed to connect his claims to any actual false claims for payment. The relator presented evidence from a CMS database showing that during a single calendar year, every established patient was billed at the highest possible evaluation and management code, a situation he described as implausible and supporting reliable indicia of fraud. However, the court disagreed, explaining that details of actual submitted claims were needed.
Defendant Specialist Doctors’ Group LLC moved to dismiss a qui tam action alleging fraud on Medicare.
Relator Martin Girling sold his podiatry practice to the defendant in 2010, and thereafter continued working as a contract employee. During his employment, Girling treated patients and recorded the types of services he provided, but was not involved in billing or coding.
At issue in the lawsuit are the defendant’s billing codes for evaluation and management services, which differ based on the complexity of services provided during the patient encounter. The more complex treatment, the higher the code number and higher the reimbursement from Medicare.
According to the relator, the defendant would use higher codes than warranted for straightforward patient encounters. He also alleged the defendant would bill for additional services using code modifiers, even when the service was performed during a routine visit and was not significant enough to warrant additional billing.
The relator alleged he was contacted by various patients who complained about discrepancies and irregularities in their billing statements. Based on his review of these billings, Girling estimated that the defendant engaged in overbilling between 2014 and 2017.
Girling alleged he discovered three types of overbilling: (1) fraudulent upcoding of E/M services; (2) fraudulent billing of patients for E/M services that were never rendered; and (3) improper utilization of modifier codes to enable billing when no billing should have been done. According to the relator, this was not accidental, but part of a scheme devised by the defendant to submit false claims. The relator alleged the defendant perpetrated this scheme by using doctors who worked on a contract basis and who were not actively involved in billing. This allowed the defendant to inflate its claims and deceive government payers without either side becoming aware.
The relator provided twelve examples of Medicare patients he alleged were overbilled, including the date of the visit, the services performed and identified by the physician, the services billed, and the explanation of the service codes used. Further, the relator asserted that he reviewed the defendant’s billings in CMS’ public database of services and procedures provided to Medicare. The relator said the database showed that in 2014, every E/M visit for established patients was billed at the highest possible billing code. According to the relator, it would be nearly impossible for all established patients to have had complex E/M services provided to them, and therefore, this data indicates systematic fraud.
The defendant moved to dismiss the complaint, arguing that the claims are not sufficiently pled with particularity and with some indicia of reliability.
In Count I, the relator alleged the defendant knowingly presented or caused to be presented, false claims for payment to the government, based on the three alleged schemes outlined above. The defendant argued this claim was not pled with particularity and that the allegations lack an indicia of reliability. The defendant argued the relator failed to allege any facts regarding the actual submission of any specific claim for payment to the government.
The court agreed, finding this omission fatal to the relator’s claim. Even taking the allegations as true, the court found the relator sufficiently alleged a scheme, but failed to provide any indication that actual false claims were submitted. The court noted the relator conceded that he was not involved in the defendant’s billing during his employment. The court dismissed this count, but granted the relator leave to amend to correct this deficiency.
In Count II, the relator alleged the defendant knowingly made, used, or caused to be made or used, a false record or statement material to a false or fraudulent claim. The relator based this claim on the same conduct that formed the basis for Count I. However, the court found the relator failed to allege facts showing that the false statements were material to a false claim, as the court already found the relator had not sufficiently alleged the existence of actual false claims for payment. Because he could not connect the false statements to allegedly false claims, the court dismissed the case on this basis as well, and gave the relator leave to amend.
