WILLIAM J. HAYNES, JR., District Judge.
I. Procedural History..........................................................825 II. Defendants' Motion to Dismiss and for Summary Judgment On Relator's Retaliation Claim.........................................................826 III. United States's and Defendants' Motions for Summary Judgment................828 A. Findings of Fact........................................................828 1. MedQuest............................................................828 2. The Medicare Enrollment Process.....................................830 3. MedQuest's Medicare Applications for the Nashville Area IDTFs.......835 4. MedQuest's Nashville Area IDTFs' Performance........................836 5. Expert Proof on Medicare Administrative Practices Approving Supervising Physicians............................................842 6. Damages Proof.......................................................845
B. Conclusions of Law......................................................845 1. The Necessity of a Statute or Regulation............................850 2. The Governing Medicare Regulations and Rules........................852 3. The FCA Violations..................................................862 a. MedQuest's Nashville Area IDTFs' Testing........................864 b. MedQuest's Medicare Billings with Dr. Witt's Billing Number.....865 4. Damages and Penalties...............................................868 IV. Relief.................... .................................................870
Plaintiff, Karen Hobbs, a former employee of MedQuest Associates, Inc. filed this action as Relator on behalf of the United States, under the False Claims Act, ("FCA"), 31 U.S.C. §§ 3729 through 3733 against the Defendants: MedQuest Associates, Inc., ("MedQuest"), BioImaging at Charlotte, Inc., ("Charlotte Center"), BioImaging of CoolSprings, Inc. ("CoolSprings Center") and BioImaging at Harding, Inc. ("Harding Center"). On March 31, 2009, the Government notified the Court of its decision to intervene and filed its intervening complaint on May 22, 2009. (Docket Entry No. 49). In essence, the Relator's and United States's common claims are first that the Defendants unlawfully conducted diagnostic tests of Medicare beneficiaries at its Nashville area testing centers without the required and appropriate physician supervision and that MedQuest caused false claims to be submitted and paid by Medicare for such testing in violation of 31 U.S.C. § 3729(a)(1). At its Charlotte center, the Relator and the United States also assert that MedQuest caused false claims to be submitted and paid by Medicare by using another Medicare vendor's billing number in violation of 31 U.S.C. § 3729(a)(1). The Relator also asserts a FCA claim for retaliatory discharge after she complained about Defendants' testing practices. In addition to its FCA claims, the United States asserts common law claims for unjust enrichment, payment by mistake and recoupment.
In earlier proceedings, the Court denied the Defendants' motion to dismiss (Docket Entry No. 95) concluding that Medicare regulations on physician supervision of diagnostic tests are a condition of payment and that under the factual allegations and relevant Medicare regulations, the United States and the Relator stated claims for violations of the FCA. (Docket Entry No. 94, Memorandum at 15-19).
Before the Court are the United States's motion for summary judgment (Docket Entry No. 127); the Defendants' motion for summary judgment on Relator's claims (Docket Entry No. 128); Defendants' motion to dismiss Relator's amended complaint (Docket Entry No. 148); and the Defendants' motion for summary judgment on the United States's claims. (Docket Entry No. 149).
In its motion for summary judgment, the United States contends, in essence, that the undisputed facts establish that the Defendants submitted claims for payment to Medicare for diagnostic tests of Medicare beneficiaries conducted at its Nashville area facilities without the required physician supervision and by physicians who were not approved by Medicare's designated carrier. The United States also contends that the undisputed facts are that from January, 2004 to July 1, 2005, MedQuest used a physician's Medicare billing number for its Medicare billings for tests of Medicare beneficiaries at its Charlotte facility.
In their motions for summary judgment and motion to dismiss and in their response
In their responses, the United States contends that its FCA claims are supported by undisputed facts that establish violations of controlling Medicare regulations. The Relator asserts that the Defendants' motion to dismiss that is supported by evidentiary materials, is a motion for summary judgment. Relator argues that material factual disputes exist on the merits of Relator's retaliation claim under the FCA as well as the nature of her employment relationship with MedQuest to bar summary judgment on Defendants' statute of limitations defense. In a supplemental submission, Relator argues additional precedent supports the timeliness of her FCA retaliation claim.
MedQuest hired Relator in December, 2002 as a lead technologist and later, promoted her to chief technologist. MedQuest's November, 2002 offer of employment included a "Termination" provision that "MedQuest is an at will employer, which means that either you or MedQuest may terminate the employment agreement at any time with or without notice or cause." (Docket Entry No. 148-3 at 2) (emphasis added). According to this offer, Relator's "signature on this letter indicates [Relator's] acknowledgment and acceptance of these as the full and complete terms of our employment offer." Id. Relator signed the November, 2002 offer letter on November 27, 2002. Id. at 3.
MedQuest also provided Relator its employee handbook that has an "Acknowledgment and Disclaimer of Employment Contract," to be signed by its employees. This disclaimer also provides that "either the employee or the Company
As relevant to these motions, during the course of her employment, Relator was informed and informed her supervisors as well as MedQuest's higher management
A defendant can file a motion to dismiss based upon statute of limitation defense. Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. 910, 166 L.Ed.2d 798 (2007) ("If the allegations ... show that relief is barred by the applicable statute of limitations, the complaint is subject to dismissal fox failure to state a claim.") (emphasis added). Yet, the Court agrees with Relator that given the supporting evidentiary materials that are considered by the Court, Defendants' motion to dismiss is converted into a motion for summary judgment. Fed.R.Civ.P. 12(d).
When this action was filed, the FCA lacked a limitations period for retaliation claims and the Court would "borrow" the applicable state statute of limitations for a retaliatory discharge claim. See Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U.S. 409, 417-18, 125 S.Ct. 2444, 162 L.Ed.2d 390 (2005). Tennessee law has two statutes of limitation for retaliatory discharge claims based upon the nature of the plaintiff's employment. See Gunter v. Laboratory Corp. of America, 121 S.W.3d 636, 642 (Tenn.2003). In selecting among these statutes of limitations, the issue is whether Plaintiff's injury was to his property or person. Id. at 641. For injury to one's property, the three-year statute of limitations applies, but for personal injury, the one-year statute of limitations governs. Id.
Claims of employees who are terminable at will are deemed personal injury claims. Weber v. Moses, 938 S.W.2d 387, 393 (Tenn.1996). If the employment relationship is contractual, then the injury is characterized as a property right. See Gunter 121 S.W.3d at 642. In either instance, the limitation period for a retaliatory discharge commences on the date of a plaintiff's termination. Weber, 938 S.W.2d at 391-92 ("[A] discriminatory termination ceases and is complete, when the plaintiff is given unequivocal notice of the employer's termination decision.").
Here, the documentary evidence of MedQuest's November 2002 Offer Letter and employee handbook establishes that Plaintiff was an employee at will. MedQuest's handbook stated that "neither this handbook nor any provision of this handbook creates an employment contract, a right of employment, or any other type of contract." Under Whittaker v. Care-More, Inc., 621 S.W.2d 395, 397 (Tenn.Ct.App. 1981), an employee handbook must contain "guarantees or binding commitments" for an employment contract. Thus, Plaintiff's retaliation claim is governed by a one year statute of limitation.
Here, MedQuest terminated Relator on October 26, 2004, but Relator did not file this action until 2006. The facts involving her termination were known at the time of her termination. Plaintiff contends that material factual disputes exist, but the Court is unable to discern the factual bases for any such dispute. Accordingly, the Court concludes that Relator's retaliation claim under the FCA is time-barred.
Relator's supplemental filing contends that her retaliation claim is governed by FCA's new three years statute of limitation
MedQuest is the leading diagnostic testing firm in the United States that operates more than ninety "Independent Diagnostic Testing Facilities" ("IDTFs") throughout the United States in thirteen states. MedQuest establishes the procedures for each of its IDTF's operations; hires their managers and radiologists; enrolls and provides credentialing for their staffs for Medicare and commercial insurers. For each facility, MedQuest leases or purchases the building, provides payroll services, purchases or rents diagnostic equipment, obtains insurance, and provides compliance and training for its testing centers' employees. MedQuest's centers' managers lack money to purchase large equipment, or pay physicians for services both of which MedQuest pays. (Docket Entry No. 140-5, Schaefer Deposition at 19-23, 50-54).
MedQuest's Nashville area IDTFs are the Defendants: BioImaging of Cool Springs, Inc., BioImaging at Harding, Inc., now Edmondson and BioImaging at Charlotte, Inc. For the damages period at issue, January 2004 through 2006, MedQuest's Harding and CoolSprings centers were enrolled and operated as IDTFs with CIGNA, Medicare's carrier for Tennessee. (Docket Entry Nos. 150-13 and 150-14). The Harding center's Medicare provider number was 3790454 and subsequently 3790906. (Docket Entry No. 138, Haines Declaration). The CoolSprings center's Medicare provider number was 3790904 and subsequently 3790907. Id. From January 2004 until July 1, 2005, MedQuest
MedQuest's Charlotte center arises out of its past relationship with Dr. William Witt, a board certified radiologist and former chief radiologist at a Veterans' Administration ("VA") hospital. In November 1998, Nashville Diagnostic Imaging ("NDI"), a management company affiliated with MedQuest, entered into an agreement with Dr. Witt "to provide management and related services to Dr. Witt at the site of his outpatient physician practice." (Docket Entry No. 150-15, 1998 Management Agreement at 1). Under this agreement, Dr. Witt would "continue to practice radiological medicine and practice as a physician practicing outpatient radiological medicine at 1800 Charlotte Avenue, Nashville, Tennessee" Id. After 1998, Dr. Witt converted his outpatient diagnostic center into a professional corporation, William S. Witt, M.D., P.C., and thereafter to a general business corporation, William S. Witt, Inc. (Docket Entry No. 150-16, Stock Purchase Agreement at 1).
On January 14, 2004, Dr. Witt sold all of his shares in William S. Witt, Inc. to BioImaging at Charlotte, Inc. for five hundred sixty thousand dollars ($560,000.00). MedQuest paid the $560,000.00 for this purchase that included MedQuest's ownership of Dr. Witt's Certificate of Need issued by State health care officials for the diagnostic testing center at that location. (Docket Entry No. 140-6, Schaefer Deposition at 4, 12-13). After the stock sale, according to Dr. Witt, "my physician practice no longer existed at the 1800 Charlotte center." (Docket Entry No. 133, Witt declaration at 2).
Dr. Witt, however, agreed to provide physician services "in a manner consistent with the past practices and procedures utilized by [Dr. Witt] while engaged by the Corporation." (Docket Entry No. 150-19, Reading Agreement). Under this latter agreement, Dr. Witt would set diagnostic/radiological standards and maintain professional and clinical standards. Id. at ¶ 1(c)-(d). Dr. Witt leased his building to the Charlotte Center. (Docket Entry No. 150-18, Lease Agreement at 1-2). The lease agreement was between "William S. Witt, M.D., maintaining a principal office and place of business" at his home address, as "Landlord," and BioImaging at Charlotte, Inc., with its principal office and place of business at 1800 Charlotte Avenue, Nashville, Tennessee ("Tenant"). Id. John K. Luke, president of BioImaging at Charlotte, Inc., signed the lease. Id. at 20, 21. As discussed in more detail infra, MedQuest controlled the business and employee operations at the Charlotte center. MedQuest used Dr. Witt's Medicare provider number to bill Medicare for all diagnostic testing of Medicare patients at its Charlotte facility until July 1, 2005. (Docket Entry No. 140-1, Blank Deposition at 25).
As to MedQuest's key officers for the issues here, Dan Schaefer is MedQuest's chief operating officer for the diagnostic centers; is listed as the authorized official on all three defendant BioImaging centers' Medicare applications that he also signed; and is responsible for Medicare billings. (Docket Entry No. 140-5, Schaefer Deposition 38-40, 43 and Docket Entry No. 140-6, 15-16, 45-56, 61-70). Wayne Blank was MedQuest's chief compliance officer for Medicare. (Docket Entry No. 140-1, Blank deposition). Marcy Burke, now Marcy Burke Delozier, was a MedQuest employee in its credentialing department and worked at its corporate headquarters. (Docket Entry No. 137, Delozier declaration at 1). Sally Bradley was Delozier's supervisor in 2002 and reported to Schaefer, but Bradley left MedQuest in 2005. (Docket Entry No. 131, Bradley Declaration
Medicare has a multi-layered administrative management structure. The Secretary of the Department of Health and Human Services ("DHHS") is responsible for the administration of the Medicare program and is authorized to issue regulations and rules.
Medicare established the IDTF as a health care provider category in July 1998, (Docket Entry No. 140-2 at 14) and as discussed infra, the Secretary issued an extensive regulation for IDTFs. CMS form 855 is the application form with instructions for enrollment of facility as an IDTF. CMS form 855 requires, inter alia, the names of the physicians who will provide the supervision for the IDTF's testing. (Docket Entry Nos. 150-13 at 22, 24-25 and 150-14 at 20, 23). This CMS form 855 has a section entitled "Authorized Official Signature" that Daniel J. Schaefer, MedQuest's chief operating officer signed. In this statement, Schaefer agreed that: "If I become aware that any information in this application is not true, correct or complete, I agree to notify the Medicare program contractor of this fact immediately." Id. at 13, 19. CMS had to be informed if a physician is being added, deleted or changed with the effective date, and the name of the supervising physician and related information, including his/her Medicare number. (Docket Entry No. 137, Burke Declaration at 2, 6).
As to supervising physicians, CMS form 855 informs applicants: "Note: Personal/Direct: If this Supervising Physician performs Personal or Direct Supervision, he/she must be currently enrolled in Medicare with the Medicare carrier to which this application is being submitted." (Docket Entry No. 141-5 at 19) (emphasis added). An attachment to CMS 855 for IDTFs also instructs that "[T]his section is to be completed with information about all supervising physicians. If there is more than one supervising physician, copy and complete this section for each." Id. On the
The CMS Medicare enrollment form for an IDTF facility also requires a listing of the specific Current Procedural Terminology codes ("CPT") that the IDTF will provide; the names and credentials of the technologists performing the diagnostic tests for those CPT codes; the name and Medicare provider number of all physician(s) who would be providing the interpretations of the diagnostic tests; and the name and Medicare number of the physician(s) who supervise the diagnostic tests to be billed. (Docket Entry No. 150-14 at 21-25).
CMS publishes manuals, policies and procedures for an IDTF compliance with the Medicare program. The CMS Manual on supervising physicians at IDTFs reads, in relevant part, as follows:
(Docket Entry No. 150-11 at 5-7) (emphasis added).
In its Medicare "Program Integrity Manual ("PIM"), CMS requires the supervising physician to acknowledge that he or she is aware of the responsibilities on that capacity." (Docket Entry No. 141-6 at 7). CMS's PIM also requires its Medicare carrier to document that each supervisory physician: "(1) is licensed to practice in the State(s) where the diagnostic tests he or she supervises will be performed, (2)
CMS's PIM also contains instructions on the supervising physician page that includes an "Attestation" by which the supervising physician described the CPT codes that he or she will supervise or exclude specific codes that the supervising physician will not supervise. (Docket Entry No. 150-14 at 24; Docket Entry No. 150-13 at 23). Defendants knew Medicare's requirements for physician supervision of diagnostic tests with contrast and provided the Medicare carrier with the lists of CPT codes of the diagnostic testing services to be provided at its BioImaging centers in the Nashville area. (Docket Entry No. 137, Delozier Declaration at 2-3).
CIGNA is Medicare's carrier for Tennessee and decides requirements for health care providers at IDTFs. (Docket Entry No. 150-6 at 7). In 2000, CIGNA published a "Local Medical Review Policy" ("LMRP") for Tennessee Medicare providers,
Id. at 32 (emphasis added)
Under the heading "Documentation Requirements," CIGNA's bulletin also requires an IDTF to maintain documentation "to demonstrate sufficient physician attendance during all hours of operation to assure that the required physician supervision is furnished. In cases of procedures requiring direct supervision, the supervising physician may oversee concurrent procedures. When direct or personal supervision is required, the record must clearly state this requirement was fulfilled." (Docket Entry No. 139 at 34).
Appendix I to CIGNA's LMRP bulletin also lists CPT codes, id., at 37-39 and the corresponding level of physician supervision during the performance of the diagnostic test, as well as the physician qualifications for the supervising physician for that test. The "MD Qualification" represents the medical specialties that would be accepted as possessing the skill and competency necessary to supervise adequately the respective tests. Id. at 36. Physicians who were not board certified in the specified specialty in a State, had to present proof of additional continuing medical education or participation in a certification programs specific to the skills involved in the tests at issue. Id.
During the relevant time, CPT codes with the corresponding level of physician supervision were published in a Medicare bulletin or CMS's or CIGNA's website with the corresponding level of physician supervision and qualifications of the supervising physician and administering technician for each CPT code, id. at 37-39 that CMS approves. (Docket Entry No. 141-1, Winter deposition at 4-5, 14, 24-25). The CPT codes include one for the diagnostic tests requiring Level 2 supervision or direct supervision, as reflected in the physician fee schedule and CIGNA's publications. (Docket Entry No. 138, Haines Declaration at 2-3 and Docket Entry No. 137, Delozier Declaration at 2-5).
CIGNA consults with CMS and other Medicare carriers' medical directors and medical specialty boards on the appropriate qualification requirements for supervising
(Docket Entry No. 150-5 at 3) (emphasis added).
As to the rationale of the importance of the supervisory physician's qualifications for an IDTF, this working group study found that:
Id. at 4. (emphasis added). See also Docket Entry No. 169-3 at 2.
Defendants note that a CIGNA representative requested guidance from CMS on whether a board certified radiologist is actually required for contrast coverage, but did not get a response. (Docket Entry No. 150-6, Guerrero Deposition at 10-12). There are not any published CMS criteria for the proficiency requirements for direct or personal physician supervision at an IDTF. (Docket Entry No. 150-2, Bossenmeyer Deposition at 3).
Defendants knew Medicare required direct physician supervision of diagnostic tests with contrast and provided CIGNA with the lists of CPT codes of the diagnostic testing services BioImaging centers. (Docket Entry No. 137, Delozier declaration at 3; Docket Entry No. 144, Hounshell Deposition at 12, 46 and 47). Christina Dozier, a former MedQuest credentialing specialist and a MedQuest contact with CIGNA, understood that the supervising physician on MedQuest's CMS 855 form had to provide the services to bill Medicare for the service, unless the physician coverage was locum tenens
During the IDTF application process, CIGNA informed MedQuest that "a physician of an IDTF must be proficient in the performance and interpretation of each type of diagnostic p[er]formed by the IDTF and provide documentation evidencing proficiency." (Docket Entry No. 141-2 at 2, 34). On May 10, 2002 and June 6, 2005, MedQuest submitted to CIGNA the CMS 855 change of information forms for its BioImaging IDTFs at Cool Springs and Harding. (Docket Entry Nos. 150-13 at 1, 13 and 150-14 at 1, 13, 19). As to supervising physicians, MedQuest's 2002 CMS 855 change of information form for supervising physicians listed two supervising physicians for its Cool Springs IDTF, Dr. Witt and Dr. Robert A. Cooney. (Docket Entry No. 150-14 at 24-25). CIGNA approved both doctors, but MedQuest withdrew Dr. Cooney as a supervising physician on November 15, 2002. (Docket Entry No. 137 at 6).
Effective April 27, 2003, MedQuest submitted a CMS 855 change of information form listing Dr. Jean Tan, an internist, as a supervising physician at its Cool Springs IDTFs. (Docket Entry No. 140-7 at 1-5). Dr. Tan marked those sections of the form under general, personal and direct supervision that would enable her to provide general supervision over the equipment, supplies and training of non-physicians personnel performing diagnostic studies. Id. CIGNA approved Dr. Tan as a supervising physician, but only after proof of her additional training for diagnostic testing. (Docket Entry No. 131 at 2-4, Bradley Declaration, and Docket Entry No. 151-6, Dunphy deposition at 4).
On July 18, 2005, CIGNA denied MedQuest's request for approval of Dr. Thomas Henry, as a supervising physician at MedQuest's Cool Springs facility because he was "not board certified in Radiology" as required by 42 C.F.R. § 410.33. (Docket Entry No. 140-2 at 2, 34). CIGNA informed MedQuest of the appeal process for its denial. Id. CIGNA denied other MedQuest's informal telephonic requests for approval of physicians as supervising physicians who were not board certified radiologist or a physician trained for IDTF testing. (Docket Entry No. 169-2 at 3).
Effective July 1, 2005, Defendant BioImaging at Charlotte enrolled with CIGNA as an IDTF with the Medicare program. (Docket Entry No. 151-20). After its earlier purchase of William S. Witt, Inc. in January 2004, MedQuest billed the Medicare program for diagnostic testing of Medicare beneficiaries at the Charlotte facility, but used Dr. Witt's Medicare provider number from January 15, 2004 through June 30, 2005. (Docket Entry No. 146, Haines Deposition at 2, 14; Docket Entry No. 138, Haines Declaration at 3; and Docket Entry No. 64, Defendant's Answer at 45). Before January 2004, Dr. Witt was enrolled with Medicare as a physician practice for diagnostic services at 1800 Charlotte. (Docket Entry No. 140-1, Blank deposition at 59). The Medicare number for billing for an IDTF refers to a facility rather than to an individual. (Docket Entry No. 144, Hounshell Deposition at 43). Medicare billing numbers can be researched from public records. (Docket Entry No. 140-2, Blank deposition at 5-6).
As to why the Charlotte center did not apply as an IDTF in 2004, Wayne Blank, MedQuest's chief compliance officer explained that "they just messed up and didn't get it enrolled until they decided to do the tax ID, and that's when they saw it was still enrolled as William Witt." (Docket Entry No. 140-2 at 2). Blank described the Charlotte center as operating as an IDTF as of January, 2004, id. at 2, but did not consider "a lot of difference" between a physician practice and an IDTF. Id. As quoted earlier supra at 829, as of January, 2004, Dr. Witt considered his prior physician practice ended with MedQuest's stock purchase of his corporation.
MedQuest submitted a new enrollment application for its Charlotte facility and filed the Choice Point report with its new application. (Docket Entry No. 140-1, Blank deposition at 47 and Docket Entry No. 140-2 at 1). MedQuest also consolidated all of the Nashville area BioImaging Centers under one tax identification number. Chris Wicker, MedQuest's director of accounts receivables, changed the tax identification number for the BioImaging Centers effective July 1, 2005, and consolidated all BioImaging centers with a single tax identification number.
MedQuest operated the BioImaging IDTFs', including the Charlotte Center and provided administrative services to all BioImaging Centers, including information technology. At MedQuest's Nashville area IDTFs, the standard procedure was for a physician to supervise contrast studies regardless of payor, and the IDTF staff selected physicians for contrast studies. (Docket Entry No. 151-5, Baggett's Deposition at 6 and Docket Entry No. 151-6 Dunphy's Deposition, at 4). MedQuest's IDTFs retained radiologists to read diagnostic images off-site so as to allow on-site radiologists more time to provide contrast coverage. (Docket Entry No. 151-6 at 8). Yet, the standard practice did not require a radiologist who was already on-site at one of MedQuest's Nashville area IDTFs to perform a diagnostic procedure and/or to read or interpret a diagnostic image or to sign the physician log. (Docket Entry No. 151-6, Dunphy Deposition at 5). In 2003, a MedQuest memorandum instructed its IDTF centers' staffs that only physicians on MedQuest's Medicare applications should be used for contrast studies of Medicare patients. (Docket Entry No. 137, Delozier declaration at 12-14).
For its Nashville area IDTFs, MedQuest had Medicare's approval of Dr. Witt as a supervising physician beginning in 2002 and Dr. Tan in 2003. Problems arose in ensuring the availability of Dr. Witt who was responsible for all three MedQuest
When Dr. Witt returned to work, by separate agreement, Dr. Witt agreed to provide supervision at MedQuest's three Nashville area IDTFs. (Docket Entry No. 163, Roberts's declaration at 3). When Drs. Witt and Tan were unavailable to provide the physician supervision of contrast tests billed to Medicare, MedQuest's Nashville IDTFs' staffs would contact several physicians to provide contrast coverage at MedQuest's Nashville area IDTFs. (Docket Entry No, 132, Just declaration at 2). MedQuest's corporate compliance officer and regulatory counsel, Wayne Blank, conceded that Medicare required such supervision to be covered by a physician on its IDTF's CMS 855 form, unless there was locum tenens
At some point, MedQuest's Nashville area IDTF managers and employees began to list contrast alerts on the daily calendar to inform staff of the time and location of scheduled contrast studies so as to ensure a supervising physician for that procedure. (Docket Entry No. 151-6 Dunphy Deposition at 6). The schedulers, the technologists, and the local IDTF staff had access to the IDTF's daily calendar, including contrast alerts. Id. at 6-7. These contrast alerts were to avoid scheduling conflicts in arranging for physician supervision of contrast studies at the different centers. Id. Technologists who were unable to schedule a supervising physician for a contrast procedure would reschedule the patient for the contrast procedure rather than inject the patient with contrast material. Id. at 9-10.
MedQuest's Nashville area IDTFs maintained a list of physicians for staff to contact and that list was posted at its individual IDTF. (Docket Entry No. 150 at 21-22 and Baggett Transcript at 44:9-23). To document these physicians' supervision of contrast studies where a radiologist was unavailable, MedQuest's Nashville IDTF's staff utilized sign-in logs for these physicians, but some physicians did not sign the log sheets for their contrast coverage. (Docket Entry No. 151-5, Baggett deposition at 2-7 and Docket Entry No. 151-6, Dunphy deposition at 6). All of these BioImaging Centers used this same supervising physician logbook form to record physician supervision of diagnostic tests administered. This log also recorded the patient's name, the names or initials of the
The undisputed facts are that the physicians on these logs were not approved by Medicare for these tests. (Docket Entry No. 141-9, Defendants' Response to the United States Requests for Admissions at ¶¶ 4-24). These physicians who provided direct supervision of diagnostic tests of Medicare patients using contrast at these MedQuest centers, were not disclosed to CIGNA and CIGNA had not evaluated these physicians' "proficiency" to supervise these tests as Medicare providers. (Docket Entry No. 138, Haines Declaration at 1-6, 37-38; Docket Entry No. 146, Haines Deposition at 13-14, 19). Yet, MedQuest billed and Medicare paid for these non-Medicare approved physicians' supervision of the tests at its Nashville area IDTFs. Id.
At times, IDTF managers and technicians began to inject patients for contrast studies without a physician present because they felt pressured to do so. (Docket Entry No. 141-8, Hobbs deposition at 17, 18; Docket Entry No. 141-7, Baggett deposition at 9, 10, 15). Baggett reported her injections without a physician to her supervisors Hobbs, Just and Dunphy. (Docket Entry No. 141-7 at 10). MedQuest's managers' responses to technician injections were to provide names of more physicians. Id. at 11-12. Defendants' employees at these Nashville area centers refer to obtaining physician coverage of diagnostic tests involving contrast as "difficult to schedule." (Docket Entry No. 166-1, Hobbs Affidavit at ¶ 9). According to Dunphy, appropriate physician supervision of contrast coverage at all their Nashville area centers was "always a concern."
According to Hobbs, MedQuest's Nashville area physicians credentialed by Medicare could not cover all three MedQuest IDTFs as supervising physicians. (Docket Entry No. 166-1, Hobbs Affidavit at ¶¶ 5,7, 9). Sally Bradley, MedQuest's director of credentialing attributed these coverage issues to CIGNA. "The problem lies in the Local Medical Review Policies for Medicare of Tennessee. They require that virtually all tests at an IDTF be supervised by a radiologist, which is much more stringent than other states." (Docket Entry No. 131, Bradley declaration at 5).
(Docket Entry No. 137 at 3).
Burke's January 2003 Memorandum, entitled "Medicare Supervising Physician Information," included among other things the following:
Id. at 12, 13 (emphasis in the original). Burke's memorandum attached copies of the CMS 855 IDTF Attachment 2 Supervising Physician form with the physician attestation, and a copy of a Supervising Physician Logbook page. Id. at 16-18.
On November 7, 2005, MedQuest expressed its concerns to CMS about CIGNA's requirement of a board certified radiologist as a supervising physician at its IDTFs. Citing 42 C.F.R. § 410.33(b)(2) as the governing regulation for an IDTF, Wayne Blank and Kimberly Hounshell of MedQuest wrote:
(Docket Entry No. 140-2 at 16-17, 20). From 2003 to 2007, CIGNA's requirement of a radiologist or a physician appropriately trained in diagnostic testing to be performed at an IDTF was not modified, amended or changed. (Docket Entry No. 176, Statement of Undisputed Facts at ¶¶ 79-80). As stated earlier, CIGNA approved Dr. Tan, an internist with additional training, as a supervising physician at MedQuest Nashville area IDTFs. (Docket Entry No. 131, Bradley declaration at 2).
Finally, Defendants contend that Medicare did not suffer any adverse financial impact from MedQuest's Charlotte's facility's lack of an IDTF status prior to July 1, 2005 and cite the Medicare policy that authorizes back-billing of testing at Witt's Charlotte facility prior to its pre-IDTF approval. The CMS Manual authorizes back-billing for successor entities, but such authorization is not automatic. Medicare requires its carriers to certify that any successor facility met all requirements of an IDTF during the back-billing period. Moreover, the successor entity had to notify the Medicare carrier of the change of ownership and apply as an IDTF.
(Docket Entry No. 150-11 at 1). Defendants do not offer any proof that CIGNA
Dr. Gary Oakes, CIGNA's associate medical director, testified that a radiologist is the most proficient specialty to determine the modality, i.e., the type of diagnostic procedure and most appropriate treatment for a patient presenting a clinical condition during such testing. (Docket Entry No. 150-1, Oakes deposition at 2, 6, 9). Dr. Oakes admitted that the referring physician decides the type of test and when the test is ordered and that any state licensed physician can provide treatment in the event of a contrast reaction, id. at 11-12, but insisted some specialized training for physician supervision of diagnostic testing at an IDTF is necessary.
(Docket Entry No. 150-1, Oakes deposition at 9-12) (emphasis added).
The evidence establishes that CIGNA sets the supervising physician requirements, not CMS. CIGNA, however, consulted on these requirements with medical specialty groups. Id. at 6. Defendants note that despite repeated requests, the task force did not secure guidelines from CMS on physician supervision requirements
Other Medicare carriers, First Coast Service Options, Inc., and Palmetto also have requirements for supervising physicians at IDTFs. First Coast April 2005 Medicare Guidelines for IDTFs provides as follows:
Supervising Physician(s)
(Docket Entry No. 151-18 at 5) (emphasis added).
Palmetto also requires that physicians providing direct supervising exhibit an appropriate level of supervision.
(Docket Entry No. 150-8 at 3, 9). Several Medicare carriers have approved non-radiologists to serve as supervising physicians at IDTFs for contrast procedures, including First Coast and Palmetto, among others. (Docket Entry No. 151-1, Dozier Transcript at 5-6; Docket Entry No. 151-2, Hounshell deposition at 2-4, 8; and Docket Entry No. 140-1 at 35-36).
According to Dr. David Levin, a radiologist and defense expert who is in charge of the radiology department at the Jefferson Medical College and Thomas Jefferson University Hospital, there are two distinct phases to computerized tomography ("CT") and Magnetic Resonance Imaging ("MRI"). "The first phase is the performance of the scan, which is typically carried out by a qualified technologist," and "i[f] the scan requires the use of contrast, a physician needs to be present because of the possibility of a contrast reaction," (Docket Entry No. 150-3 at 1). The "second phase is the interpretation of the scan, which ideally is done by a trained radiologist, but which in some facilities is done by physicians from other specialties." Id. In Dr. Levin's opinion, where contrast is utilized for diagnostic testing, any physician with any clinical medical experience is qualified and proficient to respond to an allergic reaction. Id. Dr. Levin asserts that the purpose of a physician's direct supervision of the contrast study is solely to provide medical care if the patient has an adverse or allergic reaction to the contrast medium.
Alan Gillespie, another defense expert and former senior technical advisor in CMS's division of providers and supplier enrollment opined that "there is no CMS
Defendants also cite CMS's response published at 64 Fed. Reg. 59380, 59415 (Nov. 2, 1999) commenting on the issues of physician supervision, including at IDTFs about the qualifications of nurse practitioners and clinical nurse specialists to perform radiology procedures without physician supervision. In this publication, CMS stated, in relevant part, that
(Docket Entry No. 151-12 at 2) (emphasis added).
Finally, Gillespie, a former Medicare management analyst, insurance specialist and senior technical advisor in the CMS division of providers and supplier enrollment, also opined that because the legal name of Witt, Inc. and its tax identification number did not change, there was not any necessity for MedQuest to enroll its Charlotte center as an IDTF. (Docket Entry No. 150-7 at 1). Gillespie explains that if, after receiving the new enrollment application, CIGNA had any questions about the Charlotte Center's classification as of January 2004, CIGNA should have raised the issue then. Id. at 2.
In sum, both parties presented proof on damages that conforms to their respective theories of the case.
The United States identified supervising physician logs of MedQuest's Nashville area IDTFs for Medicare claims for diagnostic testing with contrast without an approved Medicare physician that Medicare paid. (Docket Entry No. 138, Haines declaration at 2-3). That analysis revealed Medicare paid 474 claims for such testing without approved physicians at MedQuest's Nashville area IDTFs from January 15, 2004 through September 12, 2006, for a total of $343,758.22. Id. at 3. From January 15, 2004 to June 30, 2005, after MedQuest purchased Dr. Witt's practice and used Dr. Witt's Medicare billing number for Medicare payments, the United States identified 995 claims with Dr. Witt's Medicare billing number for which Medicare paid $493,185.46 to MedQuest. Id.
Charles Overstreet, Defendants' damages witness, examined MedQuest's Medicare claims for which there was lack of documentation of a physician's signature for diagnostic testing with contrast. (Docket Entry No. 151-16 at 4). With various assumptions and averages, Overstreet's analysis revealed that from January 1, 2003 through April 18, 2007, Medicare overpaid MedQuest $15,070 for such contrast studies. Id. at 4-5.
"The very reason of the summary judgment procedure is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Advisory Committee Notes on Rule 56,
In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), the United States Supreme Court explained the nature of a motion for summary judgment:
477 U.S. at 247-48, 106 S.Ct. 2505 (emphasis in the original and added in part). Earlier the Supreme Court defined a material fact for Rule 56 purposes as "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citations omitted).
A motion for summary judgment is to be considered after adequate time for discovery. Celotex Corp. v. Catrett, 477 U.S. 317, 326, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Where there has been a reasonable opportunity for discovery, the party opposing the motion must make an affirmative showing of the need for additional discovery after the filing of a motion for summary judgment. Emmons v. McLaughlin, 874 F.2d 351, 355-57 (6th Cir.1989). But see Routman v. Automatic Data Processing, Inc., 873 F.2d 970, 971 (6th Cir.1989).
There is a certain framework in considering a summary judgment motion as to the required showing of the respective parties as described by the Court in Celotex
Celotex, 477 U.S. at 323, 106 S.Ct. 2548 (emphasis deleted).
As the Court of Appeals explained, "[t]he moving party bears the burden of satisfying Rule 56(c) standards." Martin v. Kelley, 803 F.2d 236, 239, n. 4 (6th Cir.1986). The moving party's burden is to show "clearly and convincingly" the absence of any genuine issues of material
Once the moving party meets its initial burden, the Court of Appeals warned that "[t]he respondent must adduce more than a scintilla of evidence to overcome the motion [and] . . . must `present affirmative evidence in order to defeat a properly supported motion for summary judgment.'" Street v. J.C. Bradford & Co., 886 F.2d 1472, 1479 (6th Cir.1989) (quoting Liberty Lobby). Moreover, the Court of Appeals explained that
Street, 886 F.2d at 1480 (cites omitted). See also Hutt v. Gibson Fiber Glass Products, 914 F.2d 790 (6th Cir.1990) ("A court deciding a motion for summary judgment must determine `whether the evidence presents a sufficient disagreement to require a submission to the jury or whether it is so one-sided that one party must prevail as a matter of law.'") (quoting Liberty Lobby).
If both parties make their respective showings, the Court then determines if the material factual dispute is genuine, applying the governing law.
Liberty Lobby, 477 U.S. at 248, 252, 106 S.Ct. 2505 (citation omitted and emphasis added).
It is likewise true that
Bohn Aluminum & Brass Corp. v. Storm King Corp., 303 F.2d 425, 427 (6th Cir. 1962) (citation omitted). As the Court of Appeals stated, "[a]ll facts and inferences to be drawn therefrom must be read in a light most favorable to the party opposing the motion." Duchon v. Cajon Company, 791 F.2d 43, 46 (6th Cir.1986) app. 840 F.2d 16 (6th Cir.1988) (unpublished opinion) (citation omitted).
The Court of Appeals further explained the District Court's role in evaluating the proof on a summary judgment motion
InterRoyal Corp. v. Sponseller, 889 F.2d 108, 111 (6th Cir.1989) cert. denied 494 U.S. 1091, 110 S.Ct. 1839, 108 L.Ed.2d 967 (1990). Here, the parties have given some references to the proof upon which they rely. Local Rule 8(b)(7)(A) and (C) require a showing of undisputed and disputed facts.
In Street, the Court of Appeals discussed the trilogy of leading Supreme Court decisions, and other authorities on summary judgment and synthesized ten rules in the "new era" on summary judgment motions
Street, 886 F.2d at 1479-80.
The Court has distilled from these collective holdings four issues that are to be addressed upon a motion for summary judgment: (1) has the moving party "clearly and convincingly" established the absence of material facts?; (2) if so, does the plaintiff present sufficient facts to establish all the elements of the asserted claim or defense?; (3) if factual support is presented by the nonmoving party, are those facts sufficiently plausible to support a jury verdict or judgment under the applicable law?; and (4) are there any genuine factual issues with respect to those material facts under the governing law?
The Sixth Circuit has affirmed an award of summary judgment on FCA claims. United States ex rel Compton v. Midwest Spec., Inc., 142 F.3d 296 (6th Cir.1998). This Court has also awarded summary judgment on FCA claims. United States ex rel. Wall v. Circle Construction, LLC, 700 F.Supp.2d 926, 930 n. 2, 939-40 (M.D.Tenn.2010). See also United States v. Macomb Contracting Co., 763 F.Supp. 272, 274 (M.D.Tenn.1990) (Higgins, J. affirming a report and recommendation). Although the filing of cross-motions for summary judgment do not preclude a material factual dispute, cross-motions for summary judgment may be probative of the absence of any factual disputes. See United States v. Oakley, 744 F.2d 1553, 1555-56 (11th Cir.1984).
The United States's FCA theory is two-fold. The first is a legally false claim theory in that Medicare regulations and Medicare's designated carrier require a supervising physician for contrast testing at an IDTF to be a board certified radiologist or a physician with appropriate training and approved by CIGNA. The United States's proof establishes the Defendants' knowledge of this Medicare requirement through Defendants' internal documents and managers' testimony. The Government argues that its proof also establishes that MedQuest submitted claims to Medicare that were paid for contrast testing at its Nashville area IDTFs who utilized physicians for contrast studies who were neither radiologists nor physicians approved by Medicare in violation of Medicare's regulations and policies. The United States contends that these undisputed facts establish that the Defendants "knowingly" violated or recklessly disregarded Medicare's requirements for payment of claims for such testing, both of which establish violations of the FCA.
The United States' second theory is that MedQuest knowingly delayed the change of its Charlotte Center to an "IDTF" from a "physician's office" and intentionally
In sum, the Defendants' proof and argument is that neither Medicare regulations nor sound medical practice require a radiologist as a supervising physician because the only medical problem would be a patient's adverse reaction to a contrast injection for which any physician is able to address. Absent a controlling statute or regulation, the Defendants contend that any failure to satisfy a requirement of CMS and/or CIGNA, its Medicare carrier, cannot establish a FCA violation. Moreover, Defendants cite a conflict among Medicare carriers on the requirement of a radiologist for direct supervision of an IDTF's testing that also precludes any FCA liability. Defendants also assert that Medicare's backbilling policy would pay for any billing, prior to Medicare's approval of the Charlotte facility as an IDTF. Defendants note that CIGNA did not take any action after notice of MedQuest's Charlotte Center's billings with Dr. Witt's Medicare billing number.
As a threshold issue, the Court considers the Defendants' contention that a violation of a statute or regulation is necessary for a FCA violation. Under this contention, Defendants argue that their statements or omissions on CMS's enrollment forms or responses or omissions to CIGNA's directives cannot establish FCA liability.
The FCA defines a "claim" as "
As the United States notes, the First Circuit has expressly held that a violation of a statute or regulation is not a prerequisite for a FCA claim. United States ex rel. Hutcheson v. Blackstone Med. Inc., 647 F.3d 377, 379 (1st Cir.2011) ("[W]e reject the argument that, in the absence of an express legal representation or factual misstatement, a claim can only be false or fraudulent if it fails to comply with a precondition of payment expressly stated in a statute or regulation.") Yet, as Defendants respond, the Third Circuit declined such an expansive view of the FCA and limited FAC theories of liability to express or imply false certification for violation of "regulations" that "was a condition
Court have found FCA liability for false statements on Medicare enrollment applications, United States ex rel. Tyson v. Amerigroup Illinois, Inc., 488 F.Supp.2d 719, 727-28 (N.D.Ill.2007) ("[T]he enrollment forms are claims because they were `submitted in order to receive payment,' even if payment was not immediate . . . Defendants argue that because the enrollment forms do not explicitly demand any particular amount of capitation-based payments, there was insufficient evidence of falsity. As this Court stated in the summary judgment decision, `a claim does not need to be an actual invoice'.") (quoting U.S. ex rel. Schwedt v. Planning Research Corp., 59 F.3d 196, 199 (D.C.Cir.1995)). See also United States v. The Health Alliance of Greater Cincinnati, No. 1:03-cv-0067, 2008 WL 5282139 (S.D.Ohio Dec. 18, 2008) ("Ohio Heart similarly claims the government has not identified any claim upon which an FCA cause of action may be based. However, the Complaint plainly alleges that Ohio Heart submitted CMS-1500 forms to Medicare, and corresponding Medicaid or Tricare forms, even though it knew it was out of compliance with regulations and laws . . .") (emphasis added).
In sum, "FCA actions may be predicated upon a variety of underlying allegations." United State, ex rel. Villafane v. Solinger, 543 F.Supp.2d 678, 682 (W.D.Ky.2008). A FCA claim can be based upon false statements about compliance with a contract. United States v. United Technologies Corp., 626 F.3d 313, 319-20 (6th Cir.2010) ("[The parties] do not dispute that the false statements were material to the government's decision to enter into a contract with Pratt. . . . [A]n invoice, which itself does not contain a falsity, may supply the premise for a false claim if submitted in connection with a fraudulently obtained contract."); Mikes v. Straus, 274 F.3d 687, 698 (2d Cir.2001) ("An expressly false claim is, as the term suggests, a claim that falsely certifies compliance with a particular statute, regulation
False statements on costs reports are also actionable under the FCA. United States ex rel. Augustine v. Century Health Services Inc., 136 F.Supp.2d 876, 878 (M.D.Tenn.2000). See also United States v. Rogan, 459 F.Supp.2d 692, 717 (N.D.Ill. 2006). ("Medicaid claims submitted to the state are also `claims' to the federal government under the FCA.").
Lack of documentation for cost claims can also state a FCA violation. United States ex rel. Davis v. District of Columbia, 591 F.Supp.2d 30, 38 (D.D.C. 2008) ("Plaintiff alleges that the cost claim is false because defendants lacked adequate supporting documentation . . . As plaintiff describes in his Personal Disclosure Statement, he had several meetings with defendants that confirmed the facts forming the basis of this suit. For these reasons, plaintiff has pleaded with sufficient particularity.")
To be sure, not every statutory or regulatory violation is actionable under the FCA. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4th Cir.1999). "`[V]iolations of laws, rules, or regulations alone do not create a cause of action under the FCA' . . . [F]alse certifications of compliance create liability under the FCA when certification is a prerequisite to obtaining a government benefit." United States ex rel. Thompson v. Columbia/HCA, 125 F.3d 899, 902 (5th Cir.1997). Technical violations of administrative regulations
In the Court's view, these precedents demonstrate that violation of an express statute or rule is not necessary for a FCA violation. Here, Schaefer's statements on MedQuest's completed CMS application that Medicare approved, resulted, in effect, in a contract with Medicare under which MedQuest certified or agreed that testing at its IDTF including contrast studies at an IDTF would be provided in conformity with the Secretary's regulations requiring testing at its IDTFs by an approved supervising physician. In addition, the Secretary's regulations, CMS's manuals and application instructions as well as CIGNA's directives, constitute specifications for such testing at an IDTF.
For their contention on this issue, Defendants cite United States ex rel. Conner v. Salina Regional Health Center, Inc., 543 F.3d 1211, 1217 (10th Cir.2008) where the Tenth Circuit referred to the "express false certification theory" involving the anti-kickback statute that was defined as where "a government payee `falsely certifies compliance with a particular statute, regulation
Thus, assuming the lack of a governing statute or regulation, the Court concludes that proof of Defendants' false and material statements and omissions in MedQuest's enrollment applications, its claims for payment or its omissions in its reporting responsibilities necessary to secure a payment of Medicare funds, would violate the FCA. Moreover, as discussed infra, the facts here demonstrate that the Defendants violated express Medicare regulations applicable to IDTFs.
Congress established Medicare in the Department of Health and Human Services with its Secretary as a governing official with authority to promulgate regulations. 42 U.S.C. § 1302(a), §§ 1395x(v)(1)(A) and 1395hh. See Thomas Jefferson Univ. v. Shalala, 512 U.S. 504, 506-07, 114 S.Ct. 2381, 129 L.Ed.2d 405 (1994). CMS administers these programs under the Secretary's supervision. Banner Health v. Sebelius, 715 F.Supp.2d 142, 145 (D.D.C.2010). The Secretary created the CMS under the Secretary's regulations, 42 C.F.R. § 401.101 et seq. If a regulation under the Act applies, a CMS manual is not controlling and cannot supersede a Secretary's regulation that is controlling. See GCI HealthCare Centers Inc. v. Thompson, 209 F.Supp.2d 63, 73 (D.D.C.2002) ("The Secretary has the authority to balance competing concerns of the Medicare Act"). In such instances of an overriding regulation, the CMS Manual
As to the legal authority of CMS and CIGNA, 42 U.S.C. § 1395u(a) provides that "[t]he administration [of the Medicare Act] . . . shall be conducted through contracts with medicare administrative contractors under section 1395kk-1." Forty-two U.S.C. § 1395kk-1(a)(1), provides that "[t]he Secretary may enter into contracts with any eligible entity to serve as a medicare administrative contractor with respect to the performance of any or all of the functions described in" 42 U.S.C. § 1395kk-1(a)(4). The term "medicare administrative contractor" includes any "agency, organization, or other person with a contract under this section," whether private or public. 42 U.S.C. § 1395kk-1(a)(3)(A). The "functions" described in Section 1395kk-1(a)(4)(A), (G) include "Determining. . . the amount of the payments required pursuant to this subchapter to be made to providers of services, suppliers and individuals" and "
Medicare carriers are considered "indispensable components of the governmental program and are in a unique position to combat the drain on public resources caused by fraudulent claims." Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 73 (2d Cir.1998) (citing United States v. Erika, Inc., 456 U.S. 201, 203, 208 n. 11, 102 S.Ct. 1650, 72 L.Ed.2d 12 (1982) (discussing efficiency of private insurance companies paying Medicare claims given the volume of such claims)). See Group Health Inc. v. Blue Cross Assn., 739 F.Supp. 921, 933 (S.D.N.Y.1990) ("HHS and the Secretary rely heavily on the participation of fiscal intermediaries, who possess accounting and health care expertise, in order to efficiently administer the [Medicare] program.").
Under Medicare regulations, the Secretary delegated to CIGNA as a Medicare carrier authority to decide issues in administering the Medicare Act: "Intermediaries and carriers act on behalf of CMS in carrying out certain administrative responsibilities that the law imposes." 42 C.F.R. § 421.5(b). Specifically, 42 C.F.R. § 410.33(b)(2) provides for an IDTF that: "The supervising physician must evidence proficiency in the performance and interpretation of each type of diagnostic procedure performed by the IDTF.
The appropriateness of the Secretary's delegation to the Medicare carriers has been recognized. Pani, 152 F.3d at 73 ("`The complexities and magnitude of governmental activity have become so great that there must of necessity be a delegation and redelegation of authority as to many functions, and we cannot say that these functions become less important simply because they are exercised by officers of lower rank in the executive hierarchy' or by private contractors.") (quoting Barr v. Matteo, 360 U.S. 564, 572-73, 79 S.Ct. 1335, 3 L.Ed.2d 1434 (1959)). See also The Ocean Conservancy v. Evans, 260 F.Supp.2d 1162,
As to whether Defendants actually violated a Medicare statute or rule, the Defendants argue that for its Medicare payments, IDTFs are governed by 42 C.F.R. § 410.32 that does not require a board certified radiologist and expressly allows any "physician" as defined by 42 U.S.C. § 1395x(r)(1) of the Medicare Act to provide coverage of its testing, including testing with contrast. Defendants contend that Section 410.33 that is cited by the United States, refers only to physicians at IDTFs that perform general supervision and note that Section 410.33 refers back to Section 410.32.
To analyze these regulations, the Court "must look at the regulations as a whole in determining the plain meaning of a term" in these regulations. Alaska Trojan Partnership v. Gutierrez, 425 F.3d 620, 628 (9th Cir.2005) (citing McCarthy v. Bronson, 500 U.S. 136, 139, 111 S.Ct. 1737, 114 L.Ed.2d 194 (1991)); See also Hadi Inc. v. United States, 1987 WL 35918 at *4-5 (6th Cir. March 24, 1987) (Merritt, J., concurring). This rule is parallel to the "fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme." Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 809, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989). Thus, the Court must consider all parts of Sections 410.32 and 410.33. Moreover, the Court must give deference to an agency's interpretation of its rules. Chevron, U.S.A. Inc. v. Natural Res. Defense Council Inc., 467 U.S. 837, 846, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).
The legal authority for Sections 410.32 and 410.33 is 42 U.S.C. § 1395ddd that is entitled "Medicare Integrity Program." This statute requires health care providers in the Medicare program to possess the "demonstrated capability to carry out [their contractual] activities." 42 U.S.C. § 1395ddd(c)(1). That statute also provides that the Medicare providers must also "meet such other requirements as the Secretary may impose." 42 U.S.C. § 1395ddd(c)(5).
42 C.F.R. § 410.32 is entitled "Diagnostic x-ray tests, diagnostic laboratory tests, and other diagnostic tests: Conditions" and contains the following pertinent provisions:
Id. (emphasis added).
Section 410.33 is entitled "Independent diagnostic testing facility" that is dedicated solely to IDTFs and reads in its entirety
(emphasis added).
The CMS Manual on supervising physicians at IDTFs cites Section 410.33 as the governing source. This CMS manual reads, in relevant part, that Medicare carriers are to determine the qualifications of an IDTF's supervising physician and requires the IDTF to inform CMS of any changes in supervising physicians by an amended CMS form 855:
(Docket Entry No. 150-11 at 5-7) (emphasis added).
Section 410.33's detailed provisions for an IDTF's operation reflect its governance of IDTFs. The IDTF was first recognized as an approved Medicare provider in 1998 and a separate section to detail its operations and staffing is a reasonable interpretation of these two sections. Section 410.33 has an express provisions for Multistate IDTFs, such as MedQuest, on express subjects at issue here:
42 C.F.R. §§ 410.33(e)(1)(ii) and (g)(1) and (2). Moreover, as quoted supra, at 833-34, the CIGNA study groups composed of Medicare carriers' medical directors and medical specialty boards set forth the reasons for distinguishing the supervising physicians at an IDTF from a hospital or clinic
As the governing regulation, Subsection 410.33(b)(2) expressly requires a supervising
Medicare administrators cite Section 410.33 as the governing regulations for IDTF, as reflected in the earlier quotation from CMS's manual: "Under 42 CFR § 410.33(b)(1), an IDTF must have one or more supervising physicians who are responsible for: The direct and ongoing oversight of the quality of the testing performed." (Docket Entry No. 150-11 at 5). CIGNA's LRMP that is cited by the Defendants, also cites Section 410.33(b) on "Physician Supervision" at an IDTF that reads, in pertinent part, as follows:
(Docket Entry No. 49-1 at p. 1)
Defendants argue that Section 410.33 refers to Section 410.32 as an indication that Section 410.32 governs IDTFs. Section 410.33(b)'s reference to Section 410.32(b)(3)(ii) and (iii) is to the requirement of direct or personal supervision for certain tests where the physician must be physically present at the testing. This interpretation is consistent with CMS's manual:
(Docket Entry No. 150-11 at 7) (emphasis added). To be sure, for payment of diagnostic X-ray tests, Section 410.32(b)(1) refers to the term "physician" as defined in 42 U.S.C. § 1395x(r) of the Social Security Act, but Section 410.33 does not refer to subsection 410.32(b)(1). In a word, Section 410.33 refers to 410.32(b)(3)(ii) and (iii), but does not incorporate the definition of physician that is in Section 410.32(b)(1). Section 410.32 does not mention an IDTF
Finally, contrary to Defendants' insistence, there is not any conflict among Medicare carriers on the requirement of a radiologist to provide direct supervision. First, CIGNA, Medicare's designated carrier for Tennessee, actually approved MedQuest's application for Dr. Tan, a non-radiologist physician with relevant training
In sum, the Court concludes that the Medicare statute and regulations expressly govern the Defendants' conduct at issue on the United States's and Relator's FCA claims. The Court's conclusions are not based on CMS or CIGNA manual or forms. Those manual and forms are interpretive guides that reinforce the language and meaning of the regulation. Under Chevron, the Court must defer to these administrative interpretations.
The purpose of the Federal Claims Act is "to provide for restitution to the government of money taken from it by fraud." United States ex rel. Marcus v. Hess, 317 U.S. 537, 551, 63 S.Ct. 379, 87 L.Ed. 443 (1943). "For a claim under the FCA, the United States must present sufficient facts that a Defendant
The FCA defines a "claim" as "any request or demand, whether under a contract or otherwise, for money or property... that is presented to an officer, employee, or agent ... or is made to a contractor, grantee or other recipient, if the money or property is to be spent or used on the Government's behalf ... and if the United States Government will reimburse such contractor, grantee, or other recipient for any portion of the money or property which is requested or demanded[.]" 31 U.S.C. § 3729(b)(2)(A)(1)(ii)(II).
For a FCA claim, the complaint must allege facts that the Defendant's submissions were "false or fraudulent" and that Defendants did so "knowingly," United States ex rel. Augustine v. Century Health Servs., Inc., 289 F.3d 409, 413 (6th Cir.2002), or with reckless disregard of the Medicare laws or regulation for medical payment. United States ex rel. A+ Homecare, Inc. v. Medshares Mgmt. Group, Inc., 400 F.3d 428, 451 (6th Cir.2005). Reckless disregard is sufficient for FCA liability because a specific intent to defraud is not required under the FCA. See United States v. Krizek, 111 F.3d 934, 941-42 (D.C.Cir.1997) (finding reckless disregard in submission of Medicare claims sufficient for FCA violation). See also United States v. Stevens, 605 F.Supp.2d 863, 867(W.D.Ky.2008) ("a physician demonstrates `reckless disregard' when he fails to take reasonable
Here, the United States asserts the "express certification" and "implied certification" theories
The Sixth Circuit also requires a false claim to be "material" to the Government's decision to pay the claim, i.e., the alleged act must be viewed for its "natural tendency" or "`potential effect of the false statement when it is made.'" See A+ Homecare, 400 F.3d at 445 (citation omitted); See also United States ex rel. Flanders v. Baptist Mem'l Health Care Corp., 525 F.Supp.2d 972, 977 (W.D.Tenn.2007). The "`materiality requirement holds that only a subset of admittedly false claims is subject to the False Claims Act liability.'" Flanders, 525 F.Supp.2d at 979 (quoting United States ex rel. Mikes v. Straus, 274 F.3d 687, 697 (2d Cir.2001)).
Here, at MedQuest's Nashville area IDTFs, Defendants have a documented and undisputed history of extensive use of physicians who lacked Medicare approval to provide any supervision at an IDTF. These physicians are not shown to possess the certification or specialized training required by CIGNA. Moreover, MedQuest's Nashville area IDTF technical staff had constant difficulties with securing any physicians for coverage of contrast testing that requires direct physician supervision. As a result, the proof establishes that MedQuest's technical non-physician staff members actually injected contrast and conducted contrast studies of Medicare beneficiaries without
As to the knowingly or reckless disregard element, MedQuest is an experienced IDTF provider that operates in thirteen states. MedQuest has been in this market since 1998 and is now the leading IDTF firm in this market. MedQuest has a trained staff on CMS 855 form and related instructions. This supervising physician coverage for the diagnostic tests with contrast was well known to MedQuest upper management and managers of its Nashville area IDTFs. Yet, the Defendants instructed their staffs to select any doctor without regard to that doctor's "proficiency in the performance and interpretation of each type of diagnostic procedure" at the Defendants' facilities. MedQuest had a clear alternative to submit physicians who were not radiologists to be supervising physicians, but who had appropriate training as with Dr. Tan, an internist. The Court concludes that the proof establishes that MedQuest's failure to provide adequate supervising physician coverage
For these reasons, the Court concludes that MedQuest's use of non-Medicare approved physicians for contrast studies represents a reckless disregard of Medicare's program integrity statute, Medicare regulations and CIGNA's requirements (expressly authorized by the Secretary's regulation) for physicians with the demonstrated capability to provide direct coverage of these tests and approved by Medicare. Defendants' extensive use for contrast studies of physicians who were neither trained nor approved by their Medicare carrier is also evidence of Defendants' reckless conduct establishing violations of the FCA. Thus, the Court concludes that the United States's proof establishes Defendants' liability under FCA precedents.
Defendants' policy argument about the rationality of CIGNA's proficiency requirement cannot set aside the Secretary's regulation, Section 410.33(b) that serves the express statutory purpose set forth in Section 1395ddd(c)(1) of the Medicare Act requiring Medicare providers possess the "demonstrated capability to carry out [its contractual] activities." 42 U.S.C. 1395ddd(c)(1). The Secretary's regulation Section 410.33 designated the Medicare carrier to determine the qualification. The issue is not a physician's ability to provide treatment if a medical problem arises from these tests, but consistent with 42 U.S.C. § 1395ddd(c)(1), the controlling issue is whether a designated physician can assure the Medicare program of his or her possession of the "demonstrated capability" or competence in all aspects of these diagnostic tests at an IDTF for Medicare beneficiaries. It must be remembered that among the "primary purposes of Medicare is to promote beneficiary access to high-quality medical care while preventing fraudulent suppliers from providing items or services to Medicare beneficiaries or billing the Medicare program or its beneficiaries." Fayad v. Sebelius, No. 09-14119, 803 F.Supp.2d 699, 705, 2011 WL 1120036 at *5 (E.D.Mich. March 25, 2011) (citing 71 Fed. Reg. 20754).
For these collective reasons, the Court concludes that the United States should be awarded summary judgment on each of these theories of liability under the FCA.
The United States' second FCA claim actually has two components: MedQuest's failure to give notice of its acquisition of Dr. Witt's Charlotte facility and MedQuest's use of Dr. Witt's Medicare billing number for MedQuest's testing of Medicare beneficiaries at the Charlotte center.
The United States and Relator assert that MedQuest's billings of Medicare for payment of its testing of Medicare patients at the Charlotte facility using Dr. Witt's Medicare billing number violates the FCA. Defendants argue that MedQuest's Charlotte facility would have been classified as an IDTF effective with the date of Dr. Witt's stock transfer and this classification would not have affected its Medicare payment because both physicians' offices and IDTFs are paid under the same physician fee schedule. The United States responds that with the stock transfer, Medicare regulations required Dr. Witt or the Charlotte Center to enroll as an IDTF.
Forty-two C.F.R. § 410.33(a)(1) prescribes the "rules [that] apply when an IDTF furnishes diagnostic procedures in a physician's office." For Medicare payment of services by a qualified physician for certain contrast procedures 42 C.F.R. § 410.33(a)(1) requires as follows:
42 C.F.R. § 410.33(a)(1) (emphasis added).
The IDTF regulation, 42 C.F.R. § 410.33(g)(2), requires an approved IDTF or applicant for an IDTF status to provide, in pertinent part, notice of
Significant here is that MedQuest purchased Dr. Witt's Certificate of Need from Tennessee health officials for the Charlotte diagnostic testing facility at that location. Under Tennessee law, any transfer of a Certificate of Need for a health care facility is null and void unless there is a transfer of ownership, Scott v. Ashland Healthcare Center, Inc., 49 S.W.3d 281, 287 (Tenn.2001). This exception is in Tenn.Code Ann. § 68-11-1620(a) that "nothing in this section shall prohibit the transfer of a certificate of need, other than a certificate of need for the establishment of a new health care institution,
MedQuest acquired Dr. Witt's practice in January 2004, but failed to notify or to apply for enrollment as an IDTF and for its Medicare billing number until June 2005. As the designated Medicare provider at the Charlotte location, Dr. Witt had a duty to report the change of ownership of that facility to Medicare, but as a Medicare provider and new owner of the Charlotte facility, MedQuest also owed a legal duty to report the change of ownership. This duty is reflected in CMS's directive to MedQuest to submit a CMS 855 change of information form. The CMS
Moreover, 42 C.F.R. § 410.33(i)(1) addresses the commencement date of an IDTF's billing of Medicare.
Under 42 C.F.R. § 410.33(h), "CMS will revoke a supplier's billing privileges if an IDTF is found not to meet the standards in paragraph (g) or (b)(1) of this section."
Yet, the Medicare policy, cited by the Defendants as allowing backbilling, provides that "
The use of another provider's Medicare billing number can give rise to a FCA violation. United States v. Mackby, 339 F.3d 1013, 1015 (9th Cir.2003) (where the non-physician partner in a partnership provider service, who was not qualified to perform the services, used the Medicare billing number of his partner who was qualified to provide services resulting in a FCA violation).
Here, Dr. Witt testified that with MedQuest's acquisition of William S. Witt Inc his physician practice ended. Under his reading contract with MedQuest, Dr. Witt who was to provide coverage at all three of MedQuest's Nashville area IDTFs, was unavailable for coverage of contrast tests
Eighteen (18) months lapsed before MedQuest informed CMS of the change of ownership of the Charlotte location, Defendants billed the Medicare program for diagnostic services performed at the Charlotte center using Dr. Witt's Medicare physician provider number. Once Aetna informed CIGNA of the Charlotte center's actual owner, CIGNA required MedQuest to submit a change of information for the Charlotte facility to secure Medicare's approval. During this time period MedQuest was operating IDTFs and had to be aware of the applicable Medicare regulation that requires: "Changes in ownership ... must be reported to the Medicare fee-for-service contractor on the Medicare enrollment application within 30 calendar days of the change". 42 C.F.R. § 410.33(g)(2). In face of this clear regulation, for eighteen months after this purchase, MedQuest did not inform Medicare of this change of ownership nor apply to enroll the Charlotte center in Medicare as an IDTF.
Under the Medicare backbilling policy, to backbill, MedQuest had to submit an application and be certified by a Medicare carrier. For this 18 months period, the Charlotte center did not apply and thus, was also not certified to operate as an IDTF. If this omission involved a "mom and pop" operation of an IDTF, the Court would take a different view, but MedQuest is a highly sophisticated and experienced IDTF provider with operations in 13 states. The facts on the United States's second theory prove MedQuest's reckless disregard of 42 C.F.R. § 410.33(g)(2) and the Medicare backbilling policy.
As to the award of damages and penalties for these FCA violations, 31 U.S.C. § 3729(a) provides that for a FCA violation, the Defendant "is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000 ...
Given the Court's legal conclusions and factual findings, the Court deems the Government's damages proof to warrant an award of damages. The supervising physician logs of the Defendants'
As to the appropriate measure for a penalty award, "the court must determine `[w]ith what act did the defendant submit his demand or request and how many such acts were there?' Thus, separate penalties are to be assessed for each request for payment, rather than for each false statement." United States ex rel. Augustine v. Century Health Services, Inc., 136 F.Supp.2d 876, 895 (M.D.Tenn. 2000) (quoting and citing United States v. Krizek, 111 F.3d 934, 939-40 (D.C.Cir. 1997)). In Century Health, the FCA violations were submissions of cost reports.
Medicare pays claims only for services provided to an "eligible individual." See 42 U.S.C. § 1395x, 1395b-3, 1395w-21 and 1395w-28. Here, Defendants provided testing services to eligible Medicare beneficiaries. As the Sixth Circuit observed "[u]nder the Medicare regulatory regime, service providers are paid for `the reasonable cost of services
United States v. Bornstein, 423 U.S. 303, 311, 96 S.Ct. 523, 46 L.Ed.2d 514 (1976); I See also United States ex rel. Kreindler & Kreindler v. United Technologies Corp., 985 F.2d 1148, 1157 (2d Cir.1993).
Thus, the Court concludes each claim submitted by MedQuest for each contrast testing of a Medicare beneficiary without an approved Medicare physician, represents the appropriate basis for the award of penalties under the FCA. MedQuest is an experienced provider of IDTF services with an extensively trained staff. MedQuest is the leading IDTF firm in the nation that operates in thirteen states. MedQuest had a clear alternative to submit physicians who were not radiologists, but who had the appropriate training, as with Dr. Tan, but elected not to do so. This supervising physician coverage for the diagnostic tests with contrast was well known to MedQuest's upper management and managers of its Nashville area IDTFs. The proof establishes that this lack of supervising physician coverage for the diagnostic tests with contrast at MedQuest Nashville area IDTFs was so significant that MedQuest's technical staff actually conducted the diagnostic testing without any physician supervision. Damages are not sought or awarded for those acts. Thus, in these circumstances, the Court deems the $11,000 penalty appropriate for each of the false claims involving the use of non-Medicare approved physicians submitted by MedQuest to Medicare for payment from January 15, 2004 through September 12, 2006.
For MedQuest's Charlotte billings with Dr. Witt's Medicare billing number, 42 C.F.R. § 410.33(g)(2) allows a thirty day window for submission of any change in ownership of an approved provider.
For these collective reasons, the Court concludes that the United States's motion for summary judgment on its FCA claims should be granted (Docket Entry No. 127); the Defendants' motion for summary judgment (Docket Entry No. 128) should be granted on Relator's retaliation claim, but otherwise denied; Defendants' motion to dismiss Relator's amended complaint (Docket Entry No. 148) should be granted on her retaliation claim, but otherwise denied; and the Defendants' motion for summary judgment on the United States's FCA claims should be denied. (Docket Entry No. 149). With these conclusions, the Court deems the Government's common law claims to be moot. An Order awarding damages will be entered upon the parties' stipulation or proof on the billings at the Charlotte facility after the 30 days window for notice of change of ownership in 42 C.F.R. 410.33(g)(2).
An appropriate Order is filed herewith.