Third Party May Challenge CIDs Where Its Interests at Stake; United States District Court for the Southern District of Illinois No. 3:20-MC-53-NJR, General Medicine PC v. United States


The district court denied a petition to set aside the government’s CIDs seeking information about physician and nursing services provided to long-term care facilities in connection with a False Claims Act investigation. The respondent argued the CIDs were too broad and issued in bad faith, and that the government already had the relevant information in its possession. However, the court found the information requested was relevant to the FCA investigation and that the government sought the views of the nursing facilities, and therefore could not have obtained this information from the respondent, which merely provided services as a third-party vendor to the facilities. Despite its concern about the three-year length of the investigation, the court found no evidence of bad faith or intent to harm the respondent. As an initial matter, the court agreed that the respondent had standing to challenge the CIDs. The government argued that the FCA allows only the recipient of a CID to challenge the process, but the court found no language prohibiting an involved third party from filing a petition to set aside. Because the respondent was directly implicated in the CIDs and its business interests were at stake, the court concluded the respondent had standing.

General Medicine PC petitioned the court to set aside certain civil investigative demands served upon nursing facilities for which General Medicine provides healthcare services. The CIDs were issued by the United States in connection to a False Claims Act investigation.

General Medicine provides nursing and other long-term care facilities with physicians and nurse practitioners that specialize in the near-daily monitoring and care of post-acute patients. The government sought to determine whether General Medicine submitted false claims to Medicare based on excessive, inflated, and medically unnecessary services provided to nursing facility residents and whether the defendant knowingly upcoded claims for payment to obtain higher reimbursement, performed cursory visits with residents that did not provide any benefit or meet reimbursement requirements, and unbundled related services into multiple visits to artificially generate additional claims and revenue. General Medicine also allegedly billed for patient visits at the highest reimbursement code available, which should only be used for comprehensive, complex visits.

The government issued CIDs for information about these visits after being contacted by a nursing facility that terminated its relationship with General Medicine due to apparently unnecessary orders.

On July 28, 2020, General Medicine initiated this action to set aside CIDs issued to various nursing facilities. Consisting of six interrogatories, the CIDs ask the facilities to indicate: (1) the General Medicine practitioners who have provided services at the facility within the last 12 months; (2) whether the facility has received any complaints about General Medicine or a General Medicine practitioner during the past 12 months and details about the complaint(s); (3) whether resident medications are regularly reviewed for dosage, discontinuation, and/or contraindication and details about that review including General Medicine’s involvement; (4) whether resident care plans are regularly reviewed and details about that review, including General Medicine’s involvement; (5) whether the facility has any concern regarding General Medicine or its practitioners, including the frequency of visits, quality of care, time spent with residents, or any other concerns; and (6) the name of the person who prepared the responses or is knowledgeable about the responses.

In its petition, General Medicine argued the CIDs failed to comply with the specificity requirements of 31 U.S.C § 3733, did not seek information reasonably relevant to an investigation and/or sought information already in possession of the government, were overbroad and harassing, and were issued in bad faith. General Medicine also asserted it would be an abuse of process to enforce the CIDs.

In response, the government argued that General Medicine had no right to set aside the CIDs under the FCA, as the statute permits only the recipient of a CID to move to set it aside. Further, even if General Medicine could challenge CIDs it did not receive, the government argued that the CIDs were issued in good faith, serve a legitimate purpose, and request specific information that is directly relevant and material to the investigation.

In reply, the defendant argued it had standing and that the CIDs could not have been issued in good faith, as the action that allegedly prompted the CIDs—the receipt of the letter from the nursing facility—had occurred more than a year before the CIDs were issued. General Medicine also asserted that the government is no longer “investigating” but conducting one-sided discovery through the irrelevant CIDs. The court concluded that, in essence, General Medicine sought to compel the government to file an FCA case against it or drop the investigation.

As an initial matter, the court examined whether General Medicine had standing to challenge the CIDs. The FCA states that “[a]ny person who has received a civil investigative demand may file, in the district court of the United States for the judicial district within which such person resides, is found, or transacts business a petition for an order of the court to modify or set aside such demand.”

The government argued that General Medicine was not the recipient of any CID in this investigation and therefore lacked standing. General Medicine disagreed, arguing that the target of an investigation has standing to challenge the validity of a subpoena on the ground that it is in excess of the terms of the applicable statute. Moreover, it argued that federal courts have inherent federal question jurisdiction to grant equitable relief against actions that exceed statutory authority.

The court sided with General Medicine, finding that the statute did not prohibit a third party from challenging a CID, nor any statute or rule divesting the court of its authority to hear a third party’s objections to a subpoena. The court found that General Medicine had shown that it is imminently threatened with a concrete and particularized injury in fact. The respondent stated that it had lost approximately 83 percent of the facilities it served and over 70 percent of its staff since the investigation began, and one facility terminated its business relationship with General Medicine after being served with a similar CID, citing “ongoing legal proceedings” as the reason. Additionally, General Medicine noted that much of the information requested in the CIDs will have to be obtained from General Medicine and its employees. Thus, the court reasoned that General Medicine had shown that the CIDs infringe upon its legitimate business interests and therefore had standing to object.

Next, the court considered the petition on the merits. General Medicine argued the CIDs were overbroad, irrelevant, and unnecessary given that it had provided the government with the identity of all practitioners who perform patient reviews, numerous documents explaining the services and why they are performed, and thousands of Medicare audit and Administrative Law Judge decisions. Thus, according to the respondent, the government had no need to seek the same information from the nursing facilities.

General Medicine also argued that the government, rather than narrowing its years-long investigation, is now embarking on a fishing expedition by asking the facilities if they have received “any complaints” or have “any concerns” about General Medicine. The respondent argued that these inquiries are irrelevant to the investigation. Finally, General Medicine maintained that the CIDs were issued in bad faith, considering the government waited a year after obtaining certain information to send the CIDs.

In response, the government argued it had not acted in bad faith, that it had a valid purpose in issuing the CIDs, and that the information requested was relevant. The court agreed with the government, finding that the CIDs sought information reasonably relevant to the United States’ pending FCA investigation, were not unduly burdensome or overbroad, and did not seek information already in the government’s possession.

For example, Interrogatory No. 1 asked for the names of General Medicine practitioners who have provided medical services to residents in the facility in the past 12 months. The court found this request limited in time and reasonably related to the government’s investigation. While the government may already have the names of all practitioners who perform patient reviews, this interrogatory narrows the list to those providers who, in the last 12 months, may have been involved in the activity under investigation.

Interrogatory No. 2, which asked whether the facility has received any complaints about General Medicine or a General Medicine practitioner during the past 12 months, was not limited to any specific type of complaint about General Medicine or its practitioners. However, the government explained that there are many different types of complaints that could relate to the purpose of its investigation, such as instances where the respondent did not provide the level of service for which it billed. The government further clarified that Interrogatories 3 and 4 sought the nursing facilities’ perspective on resident care plans and medication reviews, which the court found clearly relevant to the investigation.

Finally, Interrogatory No. 5 asked for information regarding any concerns the facility had about General Medicine or any specific General Medicine practitioners, including any concerns about the frequency of visits, the quality of care being provided, the time spent with residents, or any other issue. The court could not conclude this information was irrelevant to the government’s investigation. Further, because the government sought the perspective of the nursing facilities, the information obtained would not already be in its possession or obtainable from General Medicine.

The court also could not conclude the CIDs were issued in bad faith or that enforcing them would be an abuse of process. The court found no evidence that the government issued the CIDs with the intent to harass or harm the respondent or to induce it to agree to a settlement. Further, the court noted that the questions were directed to nursing facilities that have direct knowledge of General Medicine’s practices. While the respondent might be frustrated by the lengthy timeline of the investigation and the effect the investigation had on its business, that did not mean the CIDs were issued in bad faith.

Nonetheless, the court did express concern about the length of the government’s investigation and the respondent’s losses. General Medicine believed the investigation has been ongoing since 2015, while the government stated that it first disclosed to General Medicine that it was under investigation in November 2017. However, while the investigation was lengthy, the court noted it had no authority to compel the government to file an FCA suit. The court therefore denied the petition.

FCA - General Medicine v US