By David Yucht, J.D.
The U.S. government’s claims against a provider of home sleep apnea tests for allegedly encouraging unnecessary multiple testing billed to Medicare in violation of the False Claims Act (FCA), and providing kickbacks to medical personnel in the form of free tests and fraudulent billing opportunities in violation of the Anti-Kickback Statute, was pleaded with sufficient specificity to be plausible and withstand a motion to dismiss, a federal district court in Illinois ruled (U.S. ex rel. Piacentile v. Snap Diagnostics, L.L.C., June 5, 2018, Norgle, C.).
Sleep apnea test. Snap Diagnostics, LLC (Snap) is a provider of home diagnostic tests for assessing sleep apnea. Following physicians’ referrals, Snap would ship testing machines to patients who were trained on their use by company representatives or physicians’ offices. After the test, the machine’s data cartridge would be returned to Snap for analysis, and a report would then be sent to the referring physician. When lobbying for Medicare approval, Snap advised the government that it was routine for patients to require a single test, and its professional literature claimed that a diagnosis could almost always be obtained after one test. A Snap executive allegedly advised that there usually was no clinical value in analyzing multiple tests.
Fraudulent scheme. The federal government intervened in a qui tam lawsuit under the FCA, accusing Snap of driving up sales by having patients conduct unnecessary multiple sleep apnea tests. Snap also allegedly encouraged prescribing physicians to bill insurance carriers even though Snap’s physicians performed the professional component of the tests and repeat tests were generally not needed. The government alleged that Snap only billed for multiple tests when the payor was Medicare or the patient was a self-pay individual, and so did not bill for multiple tests based on a legitimate clinical determination of the patient’s needs. Snap was also accused of encouraging its representatives to push for unnecessary tests, and of bribing medical personnel with free tests for themselves and their families. Snap moved to dismiss.
Objective falsity. The court was not swayed by Snap’s argument that the claims made for sleep apnea tests were not objectively false because reasonable individuals could disagree on whether the services were properly billed to the government given Medicare’s allegedly vague language concerning coverage for sleep apnea testing. The court noted that Snap’s argument called for the court to make a factual determination on the reasonableness of statutory interpretation, whether Snap knowingly submitted false claims to Medicare, and whether the tests were medically necessary. These determinations on the merits were not appropriate in adjudicating a motion to dismiss where the pleading standard is plausibility. Additionally, the government’s false claims allegations satisfied the heightened pleading standards for fraud because the complaint spelled out numerous examples of needless tests, including dates, patient names, and amounts paid.
Materiality. The court also disagreed with Snap’s position that the government failed to plead that the alleged falsity was material. The complaint alleged that, according to Medicare Guidance, Medicare would only pay for a second test if the testing were medically necessary. The court was satisfied with the allegation that by submitting multiple tests for payment, Snap represented that these tests were medically necessary, which misled the government.
Anti-kickback statute. The court also upheld the government’s anti-kickback allegations. The complaint explicitly quoted a Snap executive who discussed how enabling referring physicians to bill insurance for the professional component of the tests (which was work the referring physicians were not tasked with) "drove volume." The court also found the government plausibly alleged violations of the Anti-Kickback statute by claiming that Snap employees gave medical personnel free tests for themselves and their families.
The case is No. 1:14-cv-03988.
Attorneys: Sarah J. North, U.S. Attorney's Office, for the United States. Richard William Westling (Epstein Becker & Green, PC) and Steven Alan Miller (Reed Smith LLP) for Snap Diagnostics LLC.
Companies: Snap Diagnostics LLC; Apria Healthcare Group, Inc.; Lincare Holdings, Inc.
MainStory: TopStory CaseDecisions CMSNews AntikickbackNews BillingNews FCANews FraudNews ProgramIntegrityNews ProviderNews IllinoisNews
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