By Jeffrey H. Brochin, J.D.
Both the applicable Medicare statute and the CMS Manual concerning rules for per-mile reimbursement for technicians to collect patient samples clearly applied to technicians who actually traveled, and to construe those requirements otherwise was absurd.
A federal appeals court in Texas has affirmed the district court’s granting of summary judgment to the U.S. government in a False Claims Act (FCA) action involving falsification of laboratory technicians’ travel miles. BestCare Laboratory Services, L.L.C. (BestCare) billed Medicare for their technicians’ purported round-trip travel fees even though the laboratory samples were sent in via air delivery. The "sub-regulatory guidance" of the Medicare Claims Processing Manual (CMS Manual) that BestCare claimed they complied with was merely a policy statement with no binding effect (U.S. ex rel. Drummond v. BestCare Laboratory Services, L.L.C., February 17, 2020, Oldham, A.).
Ex-employee whistleblower. The owners founded BestCare in 2002 to provide clinical testing services for nursing-home residents, many of whom were Medicare beneficiaries. Its main laboratory was in Webster, Texas, however, within a relatively short period of time, the company opened labs in Dallas and San Antonio and specimen-processing centers in Waco, Austin, and El Paso. The relator was a competitor who became suspicious as to BestCare’s success in such expansion, especially considering that diagnostic testing for Medicare patients was not high-margin work. In 2008 BestCare’s billing manager left to go work for the relator, and she disclosed BestCare’s billing practices for travel reimbursements that indicated to the relator that BestCare had been improperly billing Medicare. The company allegedly billed reimbursements for miles purportedly driven by technicians to collect specimens from patients when the samples were actually shipped one-way via airplane without any technician onboard. In addition, BestCare often failed to prorate mileage, treating a single shipment of multiple samples as though each sample had been shipped separately.
Two motions for summary judgment. After the instant qui tam action was filed, the U.S. government decided to intervene, and they filed two partial motions for summary judgment: the first sought to hold BestCare and its owner liable for fraud, unjust enrichment, and payment by mistake; and the second one sought to hold them liable for violating the FCA. In its first motion, the government limited its damages calculation to fraudulent billings purporting to involve trips of 400 miles or more between August 4, 2005, and January 26, 2010. The government’s expert calculated damages by estimating the non-reimbursable portion of what Medicare paid using a sampling methodology developed by the Office of the Inspector General, estimating that the total excess payment to BestCare during the time period in question was $10,600,000, and the government sought judgment in that amount.
In its second motion, the government’s expert calculated damages in the amount of $10,190,545, however, because the FCA permits treble damages, that government motion sought damages of $30,571,635. BestCare and its owner appealed.
No justification via CMS manual. BestCare asserted that the statute requiring actual travel by technicians as a prerequisite to billing for such travel conflicted with the language of the CMS Manual which stated regulatory paragraphs separated by the word "or." Accordingly, they raised the defense of lack of mens rea, because they could not reasonably know that it was unlawful to bill a "per mile travel allowance" for miles not traveled by anyone.
However, the court found that argument to border on the absurd, because there was no way to read the CMS Manual in a way to suggest that BestCare could bill Medicare for miles not actually traveled by anyone.
For the foregoing reasons, the appeals court affirmed the granting of summary judgment to the government pursuant to both of their motions.
The case is No. 18-20501.
Attorneys: Samantha Lee Chaifetz, U.S. Department of Justice, for the United States. Mitchell Reed Kreindler (Kreindler & Associates) for Richard Drummond. George William Vie, III (Feldman & Feldman, PC) for BestCare Laboratory Services, L.L.C.
Companies: BestCare Laboratory Services, L.L.C.
MainStory: TopStory CaseDecisions CMSNews BillingNews FCANews FraudNews LaboratoryNews ProgramIntegrityNews ProviderNews QuiTamNews LouisianaNews MississippiNews TexasNews
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