Health Law Daily Knowledge of false claims can be inferred from impossible claim submissions
Tuesday, October 23, 2018

Knowledge of false claims can be inferred from impossible claim submissions

By Rebecca Mayo, J.D.

It is reasonable to infer that a physician knew that the billing he submitted was false when the billing reflected services provided to multiple patients in different geographic locations at the same time. A district court denied a motion to dismiss filed on behalf of a physical therapy services provider, after finding that factual allegations supported a relator’s conclusory argument that the provider knew the claims being submitted were false (U.S. ex rel. Morgan v. Champion Fitness, Inc., October 19, 2018, McDade, J.).

Complaint. A physical therapy services provider contracted with an office assistance company to assist with billing. An employee of the office assistance company filed a qui tam action against the physical therapy provider claiming that the physical therapy provider billed the United States through Medicare Part B for physical therapy services not actually rendered by the licensed physical therapists submitting the claims. According to the relator, the provider submitted bills for physical therapy performed or supervised by the owner which would have occurred at overlapping times or where it would have been impossible for the owner to be present in one location so soon after being in another location.

The relator specifically alleged hundreds of these types of billings from 2010 through 2012 and thousands during the same time period where other therapists who worked for the provider billed similarly impossible sessions. The complaint was filed under seal and it took the United States four and a half years to determine that it would not intervene. The record was unsealed and the provider was served. The provider filed a motion to dismiss.

Specificity. The court found that the relator was only required to plead representative examples of the fraud with a high level of particularity at the motion to dismiss stage. The examples provided by the relator included dates, times, and locations which provided specific enough detail to show why each particular bill was fraudulent. While the provider argued that the use of "and/or" in the pleadings did not provide sufficient specificity, the court held that the representative examples in the case infused enough particularity that the provider is on notice of what it is alleged to have done. Further, the relator was not required to allege the provider violated a regulation, only that they did not provide the services for which the government was billed, and the relator plausibly alleged that the provider billed the United States for services which were not provided.

Knowledge. According to the court, the representative examples in the complaint provide sufficient detail to support a reasonable inference providing the necessary factual support for the assertion of the provider’s knowledge. Taking the allegations in the complaint as true, the provider billed for therapy services that were impossible to provide because it would have required the owner to be in two places at once, nearly 500 times in a three year period. The court found that the owner could not have been unaware that he had not provided individual therapy for two patients at the same time in one town while also providing physical therapy to a patient 58 miles away. Additionally, having found that it is reasonable to infer that the owner knew the claims he was submitting for therapy he allegedly did not provide were false, it follows that the provider did as well.

The case is No. 1:13-cv-01593-JBM-JEH.

Attorneys: Hilary W. Frooman, U.S. Attorney General’s Office, for the United States. Stuart J. Chanen (Valorem Law Group, LLP) for Champion Fitness, Inc. and Jeff Schade.

Companies: Champion Fitness, LLC; Morgan Office Assistance

MainStory: TopStory CaseDecisions CMSNews BillingNews FCANews FraudNews PaymentNews ProgramIntegrityNews QuiTamNews IllinoisNews

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