By Gregory Kane, J.D., M.B.A.
A qui tam action brought by a former employee alleging fraudulent billing mostly survived summary judgment as the evidence of fraudulent billing and the necessity of treatments that experts disagreed on was a matter for the finder of fact and not appropriate for summary judgement.
An Arizona cancer treatment center was denied its motion for summary judgement in a qui tam action by a former employee where experts disagreed on whether billing practices had been fraudulent including whether certain procedures had been medically necessary. The disagreement will be a matter for the finder of fact. A cross-suit against the employee also survived a motion to dismiss under the faithless servant doctrine. (U.S. ex rel. J. Scott v. Arizona Center for Hematology and Oncology, PLC, April 29, 2020, Campbell, D.).
Background. The Arizona Center for Hematology and Oncology PLC, doing business as Arizona Center for Cancer Care (AZC) is a cancer treatment center with a radiation oncology department. AZC hired J. Scott in 2008 to serve as the billing manager of its radiation oncology department where he was responsible for overseeing day-to-day billing operations. Scott filed this lawsuit in 2016 alleging that AZC and its treating physicians submitted false claims for reimbursement from Medicare, Medicaid and Tricare in violation of the False Claims Act (FCA). The court dismissed two of the five schemes Scott alleged took place. The three remaining alleged schemes were (1) AZC falsely billed American Medical Association Current Procedural Terminology (CPT) code 77290 for complex simulations in stereotactic body radiation therapy, (2) AZC improperly bulled CPT code 77470 for special procedures they did not perform and (3) AZC filed claims for medically unnecessary computerized tomography (CT) scans. AZC moved to dismiss for summary judgement.
AZC terminated Scott’s employment March 29, 2018 for failure to perform his duties as billing manager. Scott claims the termination was retaliatory for his qui tam action. AZC also brought suit against Scott for breach of fiduciary duties via misconduct in bad faith alleging he improperly coded certain bills, improperly wrote off patient account balances without approval and failed to reimburse overpayments to insurance company payors. Scott cross-moved for summary judgment.
Statistical Evidence. A false claim in a complex situation can be shown via statistical evidence such that the party defending the action is not denied due process. A preponderance of evidence can be shown using statistical analysis which is a form of indirect evidence although that evidence must be sufficiently reliable. This is especially true when the alleged complexity of the case lends itself to a representative sample as the only practicable means to collect and present relevant data establishing liability. The present case alleged at least 4,000 false claims for which individualized proof of each instance could not reasonably be presented.
Expert Opinions. AZC argued that the evidence of false claims was based on the subjective view of Scott’s expert and the claims were not objectively false. In multiple instances the parties’ experts disagreed over whether claims were false and whether procedures were medically necessary. The reliability and believability of expert testimony is exclusively for the finder of fact to decide and is therefore inappropriate for summary judgment. It should be noted that Scott presented additional evidence in support of his claims and not solely expert opinion.
Scienter. An audit of AZC billing practices in 2013 was sufficient to put AZC on notice that billing practices under CPT code 77290 were improper. This was sufficient for a reasonable trier of fact to find that AZC had the requisite scienter for a false claim violation under a theory of reckless disregard. But no evidence was presented that AZC knew or had reason to know its billing practices were improper prior to this audit and summary judgement in AZC’s favor was granted for claims related to billing prior to the audit.
Unfaithful servant. AZC’s countersuit against Scott was not for lost revenues but for recover of compensation and benefits paid to Scott under the terms of his employment relying on the faithless servant doctrine. In short, that AZC paid for services that Scott failed to provide. Scott’s motion for summary judgment was denied as he failed to address this doctrine. If AZC proves its allegation against Scott, it will be sufficient to show the necessary causation under this doctrine.
The case is No. CV-16-03703-PHX-DGC.
Attorneys: Andrew S. Friedman (Bonnett Fairbourn Friedman & Balint PC) for the United States. Bryan Scott Bailey (Milligan Lawless PC) for Arizona Center For Hematology and Oncology PLC.
Companies: Arizona Center For Hematology and Oncology PLC
MainStory: TopStory CaseDecisions CMSNews BillingNews FCANews ProgramIntegrityNews QuiTamNews ArizonaNews
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