By Jeffrey H. Brochin, J.D.
A federal district court in Illinois has ruled that a resident physician at an Illinois teaching hospital sufficiently pleaded allegations of improper Medicare billing of surgical procedures to satisfy the particularity requirements of Rule 9(b) and to thereby state a facially plausible claim inferring misconduct under the False Claims Act (FCA). The relator did not need to prove anything indisputably at the motion to dismiss stage, rather, he only needed to provide enough details to inject precision and some measure of substantiation into his fraud claims, and this, the court agreed, he accomplished (U.S. ex rel. Ailabouni v. Advocate Christ Medical Center, April 23, 2018, Blakey, J.).
Background. The relator alleged that the teaching hospital and an associated surgical practice defrauded Medicare and Medicaid in various ways through their activities in the teaching hospital. His second amended complaint filed in December 2017, provided three examples of surgical procedures being conducted in which the primary surgeons falsely reported that no qualified surgical resident was available even though the relator was present and observed the whole procedure, or, another surgical resident was present but not asked to assist. The exclusions of the residents from assisting with the procedures resulted in the alleged false claims under the FCA. The teaching hospital and the surgical practice moved to dismiss the claims, which the court partially denied and partially granted.
FCA and IFCA pleading standards. The FCA and the Illinois state version, the Illinois False Claims Act (IFCA), both prohibit: (1) knowingly presenting, or causing to be presented, a false or fraudulent claim to the government for payment; and (2) knowingly making or using, or causing to be made or used, a false record or statement material to a false or fraudulent claim to the government. Claims brought pursuant to either law must satisfy Rule 9(b)’s heightened pleading requirements.
In contrast to his first amended complaint, the court found that the relator had now provided the requisite "who, what, when, where, and how of the fraud," and that he sufficiently explained which procedures the surgeons performed, why those procedures did not fall within the conditions specified in 42 C.F.R. § 415.190(c),1 and why the available residents had the qualifications to assist.
Enough medical context recited. The teaching hospital argued that the relator’s allegations should not survive because they merely demonstrated his subjective disagreement with the attending physicians’ medical judgments about residents’ ability to assist during surgery, and that such medical judgments formed an insufficient basis for a fraud claim. However, the court found that their argument carried little weight based upon the record: the relator had provided enough medical context to state a facially plausible claim that the attending physicians did not exclude residents based upon medical judgment, but rather so that they could make more money for the teaching hospital.
The teaching hospital also argued that the relator failed to plead sufficient facts about the patients’ health to demonstrate that using a resident assistant would have been indisputably appropriate for the specific surgeries. However, the court ruled that the relator was not required to prove anything "indisputably" in order to survive a motion to dismiss; he only needed to state a facially plausible claim that would allow the court to draw a reasonable inference of misconduct. Accordingly, the court ruled that at the motion stage, the relator’s alleged claims were sufficient to survive because the newly provided details injected "precision and some measure of substantiation" into the relator’s fraud allegations, and the motions to dismiss those claims were denied.
Alleged GME fraud. The relator also alleged that the teaching hospital defrauded Medicare out of graduate medical education (GME) payments by submitting the Medicare reimbursement claims (MCRs) that reflected fraudulent billing practices. The court found that the relator adequately pleaded that the hospital submitted MCRs to Medicare that certified the hospital’s compliance with Medicare statutes and regulations, and he was not required to produce the false claim document.
The case is No. 1:13-cv-01826.
Attorneys: L. Timothy Terry (The Terry Law Firm, Ltd.) for the United States. Daniel Steven Reinberg (Polsinelli PC) for Advocate Christ Hospital and Medical Center and Advocate Medical Group.
Companies: Advocate Christ Hospital and Medical Center; Advocate Medical Group
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