By Jeffrey H. Brochin, J.D.
A relator who alleged that a Pennsylvania ambulance company violated the False Claims Act (FCA) by deviating from five Medicare and Medicaid standards required for filing claims properly alleged a lack of medical necessity for certain patients to be transported by ambulance, but insufficiently alleged claims based on defective vehicles, trip origin and destination reporting, and Anti-Kickback Statute (AKS) violations, a federal district court in Pennsylvania has ruled. She also sufficiently alleged that medical billing was specifically within the owners’ knowledge and control, which allowed her to plead based on information and belief. (U.S. ex rel. Scalamogna v. Steel Valley Ambulance, Inc., June 26, 2018, Bissoon, C.).
Bases of FCA allegations. The relator formerly worked as an emergency medical technician (EMT), for Steel Valley Ambulance, Inc. (Steel Valley) in Homestead, Pennsylvania. The company provides ambulance services for patients who are insured by Medicare and Medicaid as well as privately-insured patients. She alleged that during her employment with Steel Valley, she observed the company owners and managers violate the FCA by deviating from five Medicare and Medicaid standards, and that she believes that false claims for payment were submitted to the government by virtue of these deviations.
Among the standards allegedly deviated from were state motor vehicle standards, billing for services that were medically unnecessary, transporting patients farther than to the nearest facility, and having illegal provider agreements with several providers. The company moved to dismiss the claims, and for the reasons stated below, the court ruled that only the medical necessity claim would survive the Rule 9(b) challenge.
Claims based on ‘information and belief.’ The court first addressed the issue of whether or not the relator could plead FCA violations based on "information and belief," and found that even though the allegations were not based on her personal knowledge, the claims contained plausible allegations creating a strong inference that specific false claims were submitted to the government. Medical billing was peculiarly within the owners’ knowledge and control as per the detailed job descriptions recited by the relator, and the allegations collectively showed that the relator had no role in the billing process thus allowing her to proceed with "information and belief" pleading.
Medical necessity. The relator alleged that she was repeatedly instructed to remove statements about a patient’s ability to walk, or ride in a wheelchair, from trip documentation, and that there were numerous specific ambulance trips for which one of the owners instructed her to manufacture false trip documentation for government billing purposes. The court determined that these allegations concerning medical necessity requirements were sufficient to survive a motion to dismiss despite the company’s argument that the relator failed to show that any claims were submitted.
Other claims dismissed. The claims based on vehicle defects and improper staffing, however, were dismissed due to lack of a single example that such circumstances could have given rise to a false claim for payment. Likewise, the claim that origin and destination reports were falsified was deemed to be speculative and therefore dismissed, along with the AKS violation claims.
The case is No. 2:14-cv-00524-CB.
Attorneys: Colin J. Callahan, U.S. Attorney's Office, for the United States. Kenneth R. Behrend (Behrend & Ernsberger PC) for Pamela Lynn Scalamogna. Richard J. Antonelli (Babst Calland Clements and Zomnir PC) for Steel Valley Ambulance.
Companies: Steel Valley Ambulance
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