Health Law Daily Relator proceeds with ‘expansive statistical analysis’ of medical necessity claims
Friday, November 15, 2019

Relator proceeds with ‘expansive statistical analysis’ of medical necessity claims

By Bryant Storm, J.D.

Relator successfully used a statistical analysis—alongside witness interviews—to allege the owner of SNFs upcoded rehab without regard for medical need.

A relator’s claims against a skilled nursing facility (SNF) may proceed despite the use of statically analyses to support the claims, a district court held. The court explained that the relator provided enough particular evidence of the fraud to proceed in the litigation. Additionally, the court held that the claims were not barred by the public disclosure bar because—despite the fact that CMS data is a publicly-disclosed "federal report"—such data is not substantially the same as the scheme alleged in the complaint (U.S. ex rel., Integra Med Analytics, LLC v. Creative Solutions in Healthcare Inc., November 13, 2019, Rodriguez, X.).

Medical necessity. The relator alleged Creative Solutions in Healthcare, Inc. (Creative), the owner and operator of several SNFs, violated the false claims act through three schemes: (1) pressuring therapists to use Ultra High Rehab—the utilization group with the highest per-diem rate—regardless of need; (2) training therapists how to meet the minimum thresholds to fraudulently bill for Ultra High Rehab; and (3) establishing a policy of maximizing patient stays to the 100-day Medicare limit, regardless of medical need.

The relator supported the claims with statistical and econometric analyses, focusing on identifying excessive amounts of Ultra High Rehab at Creative owned facilities compared to other SNFs. The relator argued that the use of a fixed-effect linear regression model controlled for possible alternative explanations for the upcoding, including variations in patient health, patient characteristics, and county demographics. As part of the analysis, the relator identified specific patients as examples of the upcoding and medically unnecessary treatment.

Complaint. Creative asserted that the relator failed to adequately state a False Claims Act (FCA) (31 U.S.C. §3729 et seq.) action and, in the alternative, was barred by the public disclosure bar. Specifically, Creative argued that the use of the statistics failed to adequately identify the who, what, when, where, and how of the alleged fraud.

The court held that the relator alleged each element of an FCA inquiry, that there was: (1) a false statement or fraudulent course of conduct; (2) made or carried out with the requisite scienter; (3) that was material; and (4) that caused the government to pay out money or to forfeit moneys due. The court explained that the relator alleged specific particulars of a scheme, through both witness interviews and "expansive statistical analysis." Regarding scienter, the court was satisfied that, at a minimum, the relator alleged that Creative acted in reckless disregard as to the truth or falsity of its Medicare claims. The court explained that the claims sufficiently alleged materiality because they centered on conditions of payment. Finally, the court held that although the relator had not submitted evidence of "particular and reliable indicia that false bills were actually submitted as a result of the scheme," such a level of detail was not required at the present stage of the litigation.

Public disclosure. Creative alleged that the claims were also barred by the public disclosure barbecause they were premised on CMS data which is a publically-available "federal report. "The court rejected that reasoning, holding that the critical elements of the fraudulent transaction were not in the public domain. The court explained that because one could not have produced the substance of the complaint using CMS data alone, the complaint survived the public disclosure bar.

The case is No. 5:17-cv-01249-XR.

Attorneys: Thomas Arthur Parnham, Jr., U.S. Attorney's Office, for the United States. Jeremy H. Wells (Reid Collins & Tsai LLP) for Integra Med Analytics, LLC. Jordan Kearney (Hooper, Lundy & Bookman, PC) for Creative Solutions In Healthcare, Inc.

Companies: Integra Med Analytics, LLC; Creative Solutions In Healthcare, Inc.

MainStory: TopStory CMSNews AuditNews BillingNews FCANews FraudNews MedicareContractorNews ProgramIntegrityNews QuiTamNews TexasNews

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