WDVA: Medicare fraud allegations lack specificity

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An employee accusing her former employer of Medicare fraud through misreporting of services provided didn’t provide sufficient detail, either of the fraudulent behavior itself or her alleged notice to the employer.

Background

Plaintiff Kimberly Branscome, a physical therapy assistant, brings this action against her former employer, Defendant Blue Ridge Home Health Services, as well as physical therapist Jeffery Owens and BRHH President Dustin Snow.

According to the complaint, Branscome began working at BRHH in 2013. Owens joined in late 2014. Branscome subsequently learned of 10 problematic visits Owens made to patients through April 2015. She discovered that he was making shorter visits and guiding patients through fewer or different exercises than he recorded in his notes.

Branscome met with Snow twice to discuss Owens’s issues with patients. Snow responded that he did not think Branscome should be going behind Owens’s back.

During the 10th visit in April 2015, Branscome told a patient that she was going to report Owens for not performing the requisite physical therapy. She asked the patient if the patient would be willing to repeat the statements she’d made about Owens.

Shortly thereafter, Branscome’s employment was terminated. Snow told Branscome that the patient had complained that Branscome had asked her to sign a document committing to come to court and testify against Owens for his fraudulent billing practices and false documentation. Branscome denies ever asking the patient to sign such a document. She alleges that BRHH terminated her employment because of her “persistent questions about Owens’s billing practices and her statement that she wa going to do something about it.”

Branscome filed this suit in March 2016, alleging that the Defendant submitted false claims for payment to the U.S. Department of Health & Human Services Centers for Medicare & Medicaid Services. The Defendants have moved to dismiss.

False Claims Act

The court will dismiss each of the four counts under the False Claims Act, without prejudice.

Branscome fails to state a claim under 31 U.S.C. § 3729(a)(1)(A). Because she has not alleged that a specific false claim was presented to the government, she must allege that the Defendants’ actions necessarily led to the submission of false claims to the government in order for her claim to survive their motion to dismiss. However, the complaint falls short of alleging a necessarily-led-to-submission scheme. Branscome presents no allegations that would provide evidence of firsthand knowledge of the alleged fraudulent scheme; there is no explicit connection between services and billing because the complaint does not allege that any of the listed patients were Medicare beneficiaries; and the lack of connection between services and billing undercuts using Owens’s notes to lead to the “logical conclusion” of presentment.

Although Branscome alleges the “where and when” of Owens’ inadequate physical therapy sessions, she does not allege the “where and when” of the false claims or any information regarding the “what.” While the complaint certainly sets out allegations of conduct that could have led to submission of false claims to the government through the case-mix adjustment, it does not sufficiently allege a scheme that necessarily led to the submission of false claims.

For similar reasons, Branscome also fails to sufficiently allege that the false statements were material to any payment decision by the government. Branscome does not allege facts to support a connection between Owens’s notes and the submission of false claims to CMS. In light of U.S. Supreme Court precedent, Branscome’s argument that the Defendants’ alleged statements were material because noting visit length is a condition of reimbursement is unpersuasive. Branscome’s failure to sufficiently allege a necessarily-led-to-submission scheme and her failure to sufficiently allege materiality are independent grounds for dismissal.

Branscome also fails to state a claim under 31 U.S.C. § 3729(a)(1)(B). Examining proof of purpose, rather than presentment, the court finds that Branscome fails to plausibly allege that the Defendants made false statements for the purpose of getting a false claim paid by the government. The same disconnect between Owens’s notes and the submission of any false claim that was fatal to Branscome’s § 3729(a)(1)(A) claim as to presentment undermines her subsection (B) claim as to purpose. To conclude otherwise would be to adopt the expansive view of FCA liability against which the Supreme Court has strongly cautioned.

Branscome also fails to state a claim under 31 U.S.C. § 3729(a)(1)(G), addressing “reverse” false claims. She alleges that the Defendants made false statements — namely, their allegation falsely accusing Branscome of misconduct — knowingly and with the intent to avoid, conceal,
and/or decrease their obligation to repay funds to Medicare. But she does not plausibly allege that the Defendants’ statements to the physical therapy board were material for reverse-claim purposes. The complaint fails to set out any connection whatsoever between the physical therapy board and Medicare billing or payment.

Furthermore, reverse false claims may not be based on the same conduct as a plaintiff’s claims under subsections (A) or (B). Branscome fails to allege any separate obligation that the Defendants had to pay the government that would allow her reverse-false-claim assertions to be premised on conduct different from her other claims. Thus, she fails to state a reverse false claim.

Retaliation

The court disagrees with Branscome’s argument that she engaged in protected activity by raising concerns about Owens’s treatment and billing practices with BRHH and Snow. When Branscome first met with Snow, she reported that Owens was not giving patients the physical therapy that they needed and was recording treatment that was not being performed. At the second meeting, Branscome showed Snow the inappropriate way that Owens had grabbed a patient and pulled her to her feet, informing Snow that Owens had once again not stayed the required amount of time. Notably absent from these descriptions are any report by Branscome of fraud or billing problems of any kind.

The court declines to substitute Branscome’s conclusory characterizations — that her conversations with Snow and BRHH constituted “persistent questions about billing practices” — for her specific allegations, which fail to support an inference that the conversations concerned anything other than patients’ alleged dissatisfaction.

Because Branscome has not alleged sufficient facts to show that her conversations rose above the level of general complaints, she fails to meet her burden on the first element of her retaliation claim.

Even if she had sufficiently alleged protected activity, Branscome has not shown that Snow and BRHH had notice that she was engaging in conduct that might lead to a viable FCA claim. Branscome hangs her notice allegation on Owens’s statement to her that “if it goes to court, you won’t be involved.” But here, too, there is no statement regarding fraud or billing in the conversation. Indeed, Owens’s comment may just as well have referred to the potential for a patient to sue for malpractice.

Because Branscome has not made out a prima facie case for retaliation, the court will grant the Defendants’ motion to dismiss this claim.

Unredacted complaint

Despite this court’s order directing Branscome to serve a redacted complaint, Branscome served an un-redacted copy of the complaint on Snow. Branscome explained that this was an “inadvertent mistake,” but that if she had served a redacted copy, the Defendants “likely would have complained that they were not properly put on notice of the claims against them.”

The court notes that Branscome’s explanation of her “mistake” undermines her characterization of it as “inadvertent.” Nevertheless, Branscome’s counsel took responsibility for the mistake during oral argument, and the court finds that striking the complaint in its entirety, as the Defendants have requested, would be a disproportionate sanction.

For the foregoing reasons, the Defendants’ motion to dismiss is granted, without prejudice.

Branscome v. Blue Ridge Home Health Servs. Inc., Case No. 7:1687, Mar. 13, 2018. WDVA at Roanoke (Dillon). VLW No. 018-3-073, 16 pp.