Court Holds That Disputes Over Medical Necessity Fail To Satisfy FCA’s Falsity Standard

In a January 19, 2017 decision, a federal judge in Utah considered whether claims submitted by a physician could be deemed “objectively false” based on alleged non-compliance with industry standards.  The court concluded that allegations that a doctor failed to comply with an industry standard for medical care do not satisfy the objective falsity standard and do not render false the physician’s certification that he or she believed that the services “were medically indicated and necessary for the health of the patient.”  United States ex rel. Polukoff v. St. Mark’s Hospital et al., No. 2:16-cv-00304-JNP-EJF (D. Utah Jan. 19, 2017).

The relator alleged that defendant Dr. Sorensen performed and billed Medicare and Medicaid for unnecessary medical procedures.  The specific procedure at issue was patent foramen ovale (PFO) closure, which is used to close a hole in the wall between the two upper chambers of the heart.  Dr. Sorenson performed the PFO procedure with much greater frequency than other doctors across the country because he did so as a preventative measure, rather than waiting for the patient to first suffer a stroke.  Medical opinion regarding the use of the PFO closure procedure varied and Medicare had not issued a National Coverage Determination for PFO closures.  Accordingly, to be reimbursed, healthcare providers were required to submit a certification with any request for payment stating that “the services shown on this form were medically indicated and necessary for the health of the patient.”  Relator’s cause of action rested on whether the defendants’ representation “that the PFO closures performed by Dr. Sorensen were medically reasonable and necessary” was a false representation.

In their motion to dismiss, the defendants argued that the relator failed to plead submission of an “objectively false” claim to the government.

In analyzing what constitutes a false representation, the court considered both an unpublished Tenth Circuit opinion and opinions from other circuits and district courts.  In United States ex rel. Morton v. A. Plus Benefits, Inc., the Tenth Circuit held that because liability “must be predicated on an objectively verifiable fact,” “[e]xpressions of opinion, scientific judgments, or statements as to conclusions about which reasonable minds may differ cannot be false.” 193 F. App’x 980, 983 (10th Cir. 2005) (unpublished).  Although the Morton court was not willing “to conclude that in all instances, merely because the verification of a fact relies upon clinical medical judgments … the fact cannot form the basis of an FCA claim” it did find that an allegation in a complaint that medical care provided was “therapeutic” rather than “custodial” was not “predicated on an objectively verifiable fact” the district court had properly dismissed the complaint.

Many other circuits have concurred with the Tenth Circuit’s analysis.  Notably, several circuits have focused on the presence of “imprecise and discretionary language”, United States ex rel. Lamars v. City of Green Bay, 168 F.3d 1013, 1018 (7th Cir. 1999), or the presence of “legitimate grounds for disagreement over the scope of a contractual or regulatory provision,” United States v. Southland Mgmt. Corp., 326 F.3d 669, 684 (5th Cir. 2003) (en banc) (Jones, J., concurring), as a barrier to finding falsity.  See also United States, ex rel. Jamison v. McKesson Corp., 784 F. Supp. 2d 664, 676–77 (N.D. Miss. 2011) (holding that the falsity requirement had not been met as a matter of law where the FCA claim rested “not on an objective falsehood, as required by the FCA, but rather on [the government’s] subjective interpretation of Defendants’ regulatory duties.”); United States v. Prabhu, 442 F. Supp. 2d 1008, 1026 (D. Nev. 2006) (“[C]laims are not ‘false’ under the FCA when reasonable persons can disagree regarding whether the service was properly billed to the Government.”).

Finally, the court looked to a factually similar district court opinion in which the court had considered whether a “mere difference of opinion between physicians, without more,” was sufficient to show falsity.  The Northern District of Alabama court concluded that it was not, reasoning that if

all the Government needed to prove falsity in a hospice provider case was one medical expert who reviewed the medical records and disagreed with the certifying physician, hospice providers would be subject to potential FCA liability any time the Government could find a medical expert who disagreed with the certifying physician’s clinical judgment.

United States v. AseraCare Inc, 176 F. Supp. 3d 1282, 1283, 1285 (N.D. Ala. 2016).

Applying this standard, the District of Utah concluded that the representations made by Dr. Sorensen were not objectively false because “liability may not be premised on subjective interpretations of imprecise statutory language such as ‘medically reasonable and necessary.’” Notably, the court rejected relator’s argument that attempted to equate the recommendations issued by the AHA/ASA with the medical necessity standard imposed by Medicare, stating that it was a “false equivalence” because “Medicare does not require compliance with an industry standard as a prerequisite to payment.”

In sum, the court in dismissing the complaint concluded that even if the relator “could show that Dr. Sorensen did not comply with the relevant AHA/ASA standards, this does not support a claim that Dr. Sorenson’s certification that the PFO closures were medically necessary was objectively false.” Slip op. at 19-20.

A copy of the court’s opinion can be found here.