Medical provider defeats False Claims Act suit

Where a patient alleged that corporate defendants violated the False Claims Act by knowingly submitting claims to Medicare following the dissolution of a company’s corporate charter and the revocation of its certificate of corporate authorization, but there was no showing these factors were material to payment, her claims were properly dismissed.

Background

Cortney Taylor brought this False Claims Act challenge against two doctors, five medical companies and an accounting firm. She alleged that defendants (1) knowingly submitted false claims to Medicare following the dissolution of one company’s corporate charter and the revocation of its certificate of corporate authorization and (2) engaged in a fraudulent medical upcoding scheme.

Defendants moved to dismiss, arguing that, except for a single claim against Dr. Perni, Taylor had failed to plausibly allege scienter or plead fraud with adequate particularity. The district court agreed and granted the motion to dismiss as to all defendants apart from Dr. Perni.

Following discovery, the district court granted Dr. Perni’s motion for summary judgment. It found that Taylor had “presented no evidence that Dr. Perni made any false statement and no evidence that any overbilling resulted from anything more than a mistake.” Nor did Taylor adequately establish scienter.

Public disclosure bar

Defendants argue that a 2013 investigation conducted by the West Virginia Department of Health and Human Resources at the behest of the Centers for Medicare & Medicaid Services or CMS, publicly disclosed the basis for Taylor’s claims. But the 2013 investigation and resulting report did not involve “substantially the same allegations or transactions” as Taylor’s present lawsuit. And to the extent that the report discussed medical records, it did so only in reference to delays in generating records or a failure to document medical conditions. The suit is therefore not barred by the public disclosure bar.

Materiality

Taylor alleges that the corporate defendants continued to bill Medicare while failing to disclose BestPractices of West Virginia’s administrative dissolution and revoked certificate of authorization. She claims that this failure ran afoul of two Medicare regulations, which, in pertinent part, require BestPractices of West Virginia to: (1) maintain “[c]ompliance with Federal and State licensure, certification, and regulatory requirements,” and (2) report “[a]ny adverse legal action” to CMS within 30 days.

Taylor alleges that CMS “routinely revokes” Medicare billing privileges for “providers that lose their licenses,” including “corporate providers whose State licenses to practice medicine as a corporation are revoked.” As support, she cites a slew of U.S. Department of Health and Human Services Appeals Board decisions.

Nearly all of the administrative decisions she cites, however, involved suspensions and revocations of personal medical licenses—often for reasons relating directly to medical care—not revocations of corporate certificates of authorization. Though Taylor repeatedly conflates these two categories, they are very different. And, although Taylor was free to point to other factual allegations that establish materiality with sufficient particularity, she failed to do so here.

Taylor argues that the district court’s materiality assessment was fatally flawed because it erroneously gave “great weight” to the government’s decision not to intervene in her lawsuit. To the extent that the district court did rely on this factor, that was error. But even if the district court did erroneously rely on the government’s non-intervention, that error is inconsequential.

Upcoding

The court concludes that Taylor failed to adequately plead presentment of false claims for patients other than herself. An allegation that the company directed doctors to sign something for a fraudulent purpose is not the same thing as an allegation that false claims were actually submitted. And Taylor has failed to “connect the dots” between Dr. Kitchen’s direction and the eventual “government payment.”

As to the allegedly false bill for Taylor’s medical care, Taylor fails to plead facts showing actual knowledge, deliberate ignorance or reckless disregard. Therefore, the court affirms the dismissal of Taylor’s upcoding claim for her bill against all defendants except Dr. Perni.

Dr. Perni

Taylor has failed to establish a genuine issue of material fact regarding the allegedly false statement made by Dr. Perni. For these reasons, the court affirms the district court’s grant of summary judgment to Dr. Perni on falsity grounds.

Affirmed.

United States ex rel. Taylor v. Boyko, Case No. 20-1661, June 29, 2022. 4th Cir. (Wynn), from SDWVA at Charleston (Berger). Richard Allen Monahan for Appellant. Brian D. Roark and Robert Vencill Williams for Appellees. VLW 022-2-156. 39 pp.