The claims of a former vein clinic employee partially survived a motion to dismiss because the relator employee provided "clear, plausible, and particularized" claims that the clinics billed for procedures that were not performed, in violation of the False Claims Act. The relator claimed that his vein clinic employer engaged in a scheme to defraud Medicare, Medicaid, and private insurers by billing for procedures that were never performed, performed inadequately, or performed when not medically necessary. The relator further claimed that when it was discovered he was looking into the billing practices, he was terminated in retaliation in violation of the False Claims Act (31 U.S.C. §3730(h)(1). The claims that procedures were performed inadequately or when medically unnecessary did not survive the motion to dismiss. The retaliation claims sufficed, and thus also survived the motion to dismiss, and it would be up to the employer to show he was terminated for a reason other than retaliation by raising such evidence during discovery (U.S. ex rel. Zverev v. USA Vein Clinics of Chicago, LLC, March 27, 2017, Tharp, J.).
The alleged scheme. The relator was employed by the USA Vein Clinics of Chicago location in Northbrook, Illinois, as an information technology and data analyst for six months in 2011. He was tasked with compiling patient data to identify patient population trends which required him to look into patient billing records. During the course of his work, he uncovered what he perceived to be suspicious billing practices spanning clinic locations in several states.
The vein clinics treat varicose veins through the use of an endovascular laser therapy (EVLT) procedure both for cosmetic and medical reasons. The relator alleged the clinics, through their controlling physician, billed Medicare for EVLT procedures that could not have possibly been completed on the dates represented on bills. For one day in particular, provided by the relator as an example, records indicated the doctor had nineteen patient visits in Chicago, eight in New York, and fourteen in Boston (with at least 31 of these being billed to Medicare or Medicaid). Assuming one hour per procedure, the relator concluded that these procedures could not possibly have been completed in one day. The relator also claimed the supposed single-use laser fibers used in the EVLT procedures were reused, despite patient bills indicating the single-use fibers were used and billed to Medicare. He also claimed that the medical necessity of procedures was inflated and that the ultrasound technicians recommended procedures as medically necessary "at a significantly higher rate than would be expected."
The clinic’s controlling physician discovered the relator’s investigation into the billing practices and had someone monitor his computer activities, the relator alleged. The physician later tracked him down in a restaurant over a weekend and demanded the immediate return of his work laptop (which he regularly brought home). He later called the relator, demanding he turn over his password to the computer or the police would be notified, and the relator acquiesced. Hours later, he was terminated via an email. The relator brought this qui tam action and the employers moved to dismiss with prejudice under Federal Rule of Civil Procedure 12(b)(6), claiming the claims lacked the particularity required under Rule 9(b) and that his retaliation claims were unsupported.
Pleading with particularity. Only one of the three fraudulent schemes claimed by the relator were pleaded with sufficient particularity, that being the scheme to bill for EVLT procedures that were not performed. The court noted that the claim is plausible—the allegations are that a single physician billed for a large number of procedures performed in three different cities in a single day—Chicago, New York, and Boston. "[T]here are, so the saying goes, only so many hours in the day, and the complaint reasonably contends that [the physician] could not have done all the work he claims to have done without the ability to teleport himself." The relator provided details showing the procedure dates, procedures performed, and billing dates.
The clinic employer argued that there was not enough particularity provided because the relator does not specify which specific procedures he believes were the fraudulent ones nor that the clinics necessarily did submit false bills to Medicare. The court was unswayed by these arguments. The relator plausibly alleged that the government was defrauded by one or more of the claims purportedly performed on specific dates and the reasonable inference of false claims is enough. In addition, the Seventh Circuit has long held that the particularity requirement must be relaxed where the relator may not have access to all facts necessary to detail his claim.
The clinic employer also argued the time it takes to perform a procedure differs from that alleged by the relator and that that claim by the relator is unsupported. The court acknowledges that the relator is a layperson and that it is enough, at the pleading stage, that the claim is "not inherently implausible."
The relator also claimed that the clinics performed procedures which were medically unnecessary and claims the ultrasound technicians were ordered to make as many positive diagnoses as possible. He also claimed the supposed single-use laser fibers used in the EVLT procedures were reused, although bills indicated that single-use fibers were billed. The court found that the description of both of these schemes lacked the requisite particularity to survive the motion and dismissed them with prejudice.
Retaliation. The requirements to plead retaliatory discharge are that the relator pleads facts showing (1) he took an action to stop the violations, (2) the employer knew he was engaged in that conduct, and (3) the employer terminated him as a result of that conduct. The employer argues the relator was not terminated in retaliation for engaging in a protected activity, but the relator, according to the court, has plausibly alleged that he was terminated in retaliation for his inquiry into the clinics’ billing practices. It would be up to the employer to present evidence for another reason for the termination during discovery, so this claim also survived.
The case is No. 12 CV 8004.
Attorneys: Robin B. Potter (Potter Bolanos LLC) for Constantine Zverev. Dan K. Webb (Winston & Strawn LLP) for USA Vein Clinics of Chicago, LLC, USA Vein Clinics, LLC, USA Vein Clinics of Boston, LLC, and USA Vein Clinics of New York, LLC.
Companies: USA Vein Clinics of Chicago, LLC; USA Vein Clinics, LLC; USA Vein Clinics of Boston, LLC; USA Vein Clinics of New York, LLC; USA Vein Clinics, Inc.
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