Fifth Circuit Affirms Dismissal of FCA Case Based on Inadequate Pleading of Upcoded Claims
On May 28, 2020, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal with prejudice of a False Claims Act suit brought against Baylor Scott & White Health (“Baylor”), a network of acute care hospitals. The suit, brought by Integra Med Analytics, alleged that Baylor submitted $61.8 million in fraudulent claims to Medicare by using unsupported “higher-value” diagnosis codes to inflate Medicare reimbursements. The U.S. government previously declined to intervene in the suit.
OIG Report Raises Concerns About Medicare Advantage Organizations Using Chart Reviews to Obtain Billions of Dollars in Inflated Risk-Adjusted Payments
On December 10, 2019, HHS-OIG issued a report examining the extent to which Medicare Advantage Organizations (“MAOs”) leverage chart reviews to increase risk-adjusted payments. OIG undertook its review due to concerns that MAOs “may use chart reviews to increase risk adjusted payments inappropriately.” Based on its analysis, OIG estimated that MAOs received approximately $6.7 billion in additional payments based on codes added during chart reviews. While OIG did not conclude that these payments constituted overpayments, it raised concerns about “the completeness of payment data submitted to CMS, the validity of diagnoses on chart reviews, and the quality of care provided to beneficiaries.”
Ninth Circuit Invited To Weigh In On Public Disclosure Bar, Falsity
On October 8, 2019, a judge in the United States District Court for the Central District of California granted a stay and certified two questions for interlocutory appeal in relator Integra Med Analytics’ FCA suit against Providence Health & Services (“Providence”), its affiliates, and J.A. Thomas and Associates, Inc. (“JATA”), a clinical documentation consultant. The case, on which we have previously reported here, involves allegations that Providence perpetrated an upcoding scheme whereby it trained its doctors to describe medical conditions with language that would support increasing the severity levels of the DRGs that Providence reported to Medicare, leading to inflated Medicare reimbursements.
DOJ Defends Medicare Advantage Upcoding Claims Against Sutter
On August 28, 2019, the United States filed a brief in opposition to Sutter’s June 14, 2019 motion to dismiss the Department of Justice’s Complaint-in-Intervention in a False Claims Act suit alleging Sutter knowingly submitted and caused the submission of unsupported diagnosis codes for Medicare Advantage Organization (MAO) patients in order to inflate Medicare reimbursements. On the same day, the Relator, Kathy Ormsby, also filed a similar brief in opposition to Sutter’s motion to dismiss. We previously discussed Sutter’s motion to dismiss here and the Department of Justice’s Complaint-in-Intervention here.
Medicare Advantage Providers Pay $5M to Settle FCA Allegations Relating to Unsupported Diagnosis Codes
On August 8, 2019, Beaver Medical Group L.P. (“Beaver”) and a Beaver-affiliated physician, Dr. Sherif Khalil, agreed to pay a combined total of $5 million to resolve allegations that the providers knowingly submitted diagnosis codes that were not supported by the medical records in order to inflate reimbursements from Medicare. The qui tam action was brought by a former employee of Beaver, Dr. David Nutter, and DOJ intervened. The settlement reflects DOJ’s continuing efforts to use its enforcement power to pursue fraud in the Medicare Advantage space despite recent setbacks in the UnitedHealthcare Insurance Co. v. Azar, 330 F. Supp. 3d 173 (D.D.C. 2018), which vacated a portion of CMS’s 2014 Final Overpayment Rule applicable to the Medicare Advantage program, previously discussed here. Indeed, in its press release, DOJ emphasized that preventing Medicare Advantage fraud remains a top priority: “As enrollment in Medicare Advantage continues to grow, investigation into accuracy of diagnosis data becomes ever more important….Those who inflate bills sent to government health programs can except to pay a heavy price.” We will continue to monitor and provide updates on these issues as they develop.
DOJ’s press release can be found here.
District Court Dismisses FCA Suit in Medicare Advantage Upcoding Case
On August 6, 2019, the United States District Court for the Western District of Texas granted a motion to dismiss filed by Baylor Scott & White Health (“Baylor”), a network of inpatient short-term acute care hospitals, in a False Claims Act suit alleging that Baylor submitted “more than $61.8 million in false claims” by upcoding certain diagnosis codes. The Court dismissed all claims with prejudice, finding that the Relator, Integra Med Analytics LLC, alleged only “naked assertions devoid of further factual enhancement” that were “insufficient under Rule 8’s pleading standards.” The Department of Justice declined to intervene in the suit.
Sutter Health Files Motion to Dismiss Criticizing DOJ’s Outdated FCA Theories in Medicare Advantage Case
On June 14, 2019, Sutter Health (“Sutter”) filed a Motion to Dismiss the Department of Justice’s Complaint-in-Intervention in a False Claims Act suit alleging Sutter knowingly submitted and caused the submission of unsupported diagnoses codes for Medicare Advantage patients in order to inflate Medicare reimbursements. The Department of Justice filed its Complaint-in-Intervention on March 4, 2019, which we previously discussed here.
DOJ Files Complaint-in-Intervention in Medicare Advantage Case Against Sutter Health
On March 4, 2019, the Department of Justice filed its Complaint-in-Intervention against Sutter Health (“Sutter”) and its affiliate Palo Alto Medical Foundation (“PAMF”) in a False Claims Act suit alleging that the Defendants knowingly submitted and caused the submission of unsupported diagnosis codes for Medicare Advantage patients in order to increase reimbursements from Medicare. DOJ had previously announced its decision to intervene on December 11, 2018, as we previously discussed here.
Fourth Circuit Appears Inclined to Avoid Sampling Question
As we reported here and here, the question of whether statistical sampling can be used to establish FCA liability became intertwined in a Fourth Circuit interlocutory appeal challenging the government’s assertion that it has unfettered authority to veto FCA settlements. United States ex rel. Michaels v. Agape Senior Cmty., Inc., No. 15-2145 (4th Cir.). During oral arguments last week, the Fourth Circuit panel demonstrated a clear preference for avoiding the sampling component of the appeal, likely leaving the lower courts to continue to develop a piecemeal approach.
Seventh Circuit Holds Allegations of Specific Claims Not Required to Satisfy Rule 9(b), but Sets High Bar For Pleading Claims Based on Allegations of Medically Unnecessary Services
In another recent False Claims Act (“FCA”) case decided on Rule 9(b) grounds, the Seventh Circuit rejected the contention that allegations regarding specific claims submitted are necessary to survive a motion to dismiss, but set a very high bar for pleading FCA claims premised on a lack of medical necessity.
