Duffy v. Lawrence Memorial Hospital

Filing 204

MEMORANDUM AND ORDER granting 198 Motion for Leave to File Excess Pages; denying 151 Motion for Summary Judgment. See order for details. Signed by U.S. District Senior Judge Sam A. Crow on 7/7/17. (msb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

UNITED STATES OF AMERICA,
ex rel. Megen Duffy,
Relator-Plaintiff,
vs.

Case No. 14-2256-SAC-TJJ

LAWRENCE MEMORIAL HOSPITAL,
Defendant.

MEMORANDUM AND ORDER
Megen Duffy has filed this qui tam action alleging the
violation

of

3729(a)(1).
Hospital

the

False

Duffy

(“LMH”):

Claims

asserts

that

knowingly

Act

(“FCA”),

defendant

presented,

31

U.S.C.

Lawrence
or

caused

§§

Memorial
to

be

presented, a false or fraudulent claim for payment or approval
to the Centers for Medicare & Medicaid Services (“CMS”); or made
a

material

false

statement

in

connection

with

a

claim

for

payment; or made a material false statement in connection with a
sum of money owed to the Government, or concealed or improperly
avoided

an

obligation

to

pay

or

transmit

money

to

the

Government.
This case is now before the court upon LMH’s motion for
summary judgment.

Doc. No. 151.

1

The court has reviewed the

parties’ briefs and exhibits.1

For the reasons which follow, the

court shall deny the summary judgment motion.
I. SUMMARY JUDGMENT STANDARDS
Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” FED.R.CIV.P.
56(a).

A “genuine dispute as to a material fact” is one “such

that a reasonable jury could return a verdict for the nonmoving
party.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986).

“Only disputes over facts that might affect the outcome

of the suit under the governing law will properly preclude the
entry of summary judgment.”

Id.

At the summary judgment stage,

the court’s job “is not ... to weigh the evidence and determine
the truth of the matter but to determine whether there is a
genuine issue for trial. . . . If [however] the evidence is
merely colorable . . . or is not significantly probative . . .
summary judgment may be granted.”

Id. at 249-50.

II. DUFFY’S CLAIMS
The second amended complaint (Doc. No. 18) is the operative
document for delineating Duffy’s claims.

In “Count I” Duffy

alleges multiple violations of the FCA.

Many of the alleged

violations

involve

the

value-based

purchasing

system

reimbursing care given to Medicare and Medicaid patients.
1

for
Under

The court shall grant LMH’s unopposed motion for leave to file excess pages.
Doc. 198.

2

this system, care-providers may qualify for payments from the
Government for submitting accurate and complete information to
CMS and may qualify for incentive payments if the reported data
shows that they are achieving certain treatment goals associated
with better medical outcomes.
false

data

which

affected

Duffy claims that LMH submitted

various

measures

of

inpatient

outpatient care used to calculate incentive payments.
18, ¶¶ 161-163, 166-168, 172-174.
presented

with

LMH’s

summary

and

Doc. No.

The bulk of the argumentation

judgment

motion

involves

data

reporting chest pain patients’ “arrival time” in the emergency
room.

For example, a large part of the summary judgment motion

concerns Duffy’s claim that LMH did not properly measure the
time elapsed between a chest pain patient’s “arrival” at the
emergency room and the administration of an EKG.
Duffy also alleges that LMH made a false claim or made or
used a false record certifying compliance with Section 6032 of
the Deficit Reduction Act, 42 U.S.C. § 1396a(68).

This section

requires that entities receiving annual payments of at least
$5,000,000
receiving

from
such

a

Medicaid

payments

program

establish

shall
written

as

a

condition

policies

for

of
all

employees to be provided detailed information about the FCA,
administrative remedies for false claims, state laws pertaining
to false claims, and whistleblower protections under such laws.
Id. at ¶ 160.
3

Finally, Duffy claims that LMH violated the provisions of
the FCA which prohibit using a false record or statement to
conceal

or

improperly

avoid

an

obligation

overpayment of money to the Government.
70.

This

is

a

so-called

“reverse

to

return

an

Id. at ¶¶ 164-65, 169false

claim”

under

§

3729(a)(1)(G).
III. UNCONTROVERTED FACTS
The following facts are considered uncontroverted solely
for

the

purposes

of

this

summary

judgment

motion

or,

if

in

dispute, are viewed in a light most favorable to the nonmoving
party.

Some additional facts may be incorporated in the court’s

discussion of the legal issues in the section V of this order.
LMH participates in and receives money from the Medicare
and

Medicaid

information
Quality

programs.

regarding

Reporting

(“OQR”) programs.

As

patient

(“IQR”)

a
care

and

participant,
to

CMS

Outpatient

for

LMH

reports

its

Inpatient

Quality

Reporting

On a quarterly basis, LMH’s Quality Services

Department manually abstracts data from patient charts to report
it to CMS.
programs
submit.

CMS has “Specifications Manuals” for the IQR and OQR

which

define

and

describe

the

data

which

LMH

must

According to the manuals, all documentation in the

medical record must be timed, dated and authenticated.

The

“General Abstraction Guidelines” provided by CMS state that when
abstracting

data

from

medical

records,
4

“[t]he

medical

record

must

be

abstracted

value’).”

as

documented,

(i.e.,

taken

at

‘face

If an event is not documented in the medical record,

it is not abstracted and reported.
By

successfully

and

accurately

making

such

reports,

LMH

avoids penalties in the form of reduced payments for services to
Medicare beneficiaries.
performance

on

some

Also, since fiscal year 2013, LMH’s

defined

quality

reporting

measures

has

impacted CMS payments to LMH under the Hospital Value Based
Purchasing (“HVBP”) program.

This program provides incentive

payments to hospitals based upon the hospital meeting or not
meeting certain HVBP metrics.
Some

of

determination

the
of

measures
a

patient’s

reported

by

“arrival

LMH

rely

time.”

“arrival time” in the Specifications Manuals as:
documented

time

(military

time)

the

patient

on

CMS

the

defines

“The earliest

arrived”

at

the

hospital.
When a patient arrives at the LMH Emergency Department, a
triage tech or nurse greets the patient and gets information
from the patient, including the nature of the medical issue.

An

“interim form” is used at the Emergency Department entrance to
record such things as chief complaint, time, doctor, allergies
and medications.
also
enter

uses
the

“triage

LMH discards the interim form after use.
sheets”

Emergency

to

record

Department.
5

information

The

sheets

as

LMH

patients

record

basic

information,

such

as

vital

signs,

for

example,

converted with more detail into a triage note.
discarded

after

triage note.
which

information

is

transferred

that

can

be

The sheets are

to

an

electronic

A triage note is an electronic nursing document

contains

more

detail

regarding

a

patient.

LMH

has

instructed Emergency Department staff to write down the EKG time
on triage sheets and to match the EKG time to the “triage time”
on the triage note.
Hospital

admissions

workers

have

written

down

patient

information on “face sheets” for later computer entry.
shreds the face sheets after use.

LMH

Sometimes “cheat sheets” have

been used to record patient information that was not on the face
sheets.
CMS

Specifications

department

records

and

determine “arrival time.”

Manuals

provide

outpatient

that

records

be

emergency

examined

to

LMH is advised by the manuals to look

at the earliest Emergency Department document in a patient’s
medical

record

“Emergency

to

Department

determine

the

patient’s

documentation”

is

arrival

broadly

time.

defined

to

include: vital sign records, registration forms, triage records,
EKG reports, face sheets, consent for treatment forms, etc.
Starting
Educator
Emergency

or

in

September

Clinical

Department

2010,

Coordinator
Director

Joan
6

LMH

Emergency

Elaine
Harvey,

Swisher,
sent

a

Department
and

then-

series

of

written

communications

to

Emergency

Department

staff

which

conveyed a priority that EKGs be given to chest pain patients in
the Emergency Department before the patients were registered.
Some of the communications indicated that this was important to
maximize LMH’s reimbursement from the government and that the
goal was to have the EKG within three minutes of the patient’s
entry.2

The registration process for an Emergency Department

patient is called “QTR.”

A time stamp is generated when the QTR

process is completed by the Emergency Department.
The following are three examples of the communications:
Make sure those patients who present to triage
with chest pain come STRAIGHT BACK TO A ROOM – NO VS
IN triage – StraightBack, Jack!! Quick registration
can be done at bedside!!
Bare the chest FIRST – get
those patches on and get the EKG done, THEN finish
undressing the pt, put on O2, put on monitor, get VS,
etc. Door to EKG is 3, count ‘em 3 minutes!!! We can
do this, but it will require a change in current
practice.
Yes, we are looking at other creative ways to
expedite our processes to meet the “3 minute goal.”
The key factor here will be when we complete the
registration process, so when in doubt wait to
register until that 12 lead is completed.
In 2012 CMS (Medicare) will reimburse hospitals
at a greater rate for those in the top 10% - - which
is where the 3 minute time comes in. . . . Patients
with an acute onset of chest pain or associated
symptoms should have EKG done prior to QTR.
Triage
techs should not be told “go ahead and register, I
will be right there.”

2

It is undisputed by the parties that a patient suffering a cardiac event
should have an EKG as quickly as possible.

7

Crystal

Rocha

declared

in

an

affidavit

that

she

was

employed as a registration clerk at LMH from approximately May
2012 to May 2013.3

She stated that triage techs would enter

information for Emergency Department patients (name, birth date,
reason for visit, etc.) into the LMH computer system and that
this

was

done

unconscious.

prior

to

an

EKG,

unless

the

patient

was

She further stated that if chest pain patients

were registered prior to an EKG, LMH nurses would change the
patient’s record to show the EKG was done within a few minutes
of the registration or was done at exactly the same time as the
EKG.

She testified that she was trained that cardiac patients

should not be registered before the EKG in order for LMH to
receive Medicare reimbursements.
Duffy has testified that LMH changed triage times to match
EKG times.

Jeanine McCullough-Baze, an emergency room nurse for

LMH, testified that LMH wanted EKG time to be the triage time
even if triage occurred before the EKG, in order to “pad the
statistics” to increase reimbursement.

When she questioned this

practice,

that

she

was

told

by

Swisher

3

there

were

other

In LMH’s reply brief, LMH asks that Rocha’s affidavit be stricken because
Duffy has not identified Rocha as an individual having information about this
lawsuit as required by FED.R.CIV.P. 26(a)(1)(A). Plaintiff has not asked to
make a surreply and has not otherwise responded to the request to strike.
The
court
has
broad
discretion
in
evaluating
Rule
26
violations.
Woodworker’s Supply Inc. v. Principal Mut. Life Ins. Co., 170 F.3d 985, 993
(10th Cir. 1999).
Here, the court does not believe Rocha’s affidavit is
pivotal in the decision upon LMH’s motion for summary judgment.
Therefore,
the court shall not grant LMH’s request to strike the affidavit.
But this
action is without prejudice to LMH filing a motion for other sanctions.

8

hospitals where she could work.

Christina Neibarger has stated

that when she worked as an admissions clerk, she was not allowed
to

admit

a

chest

pain

patient

into

the

hospital’s

computer

system until after the EKG was finished and that she was told
that this was done to satisfy goals for Medicare reimbursement.
LMH does not dispute that its policy was to perform EKGs
prior to completing the QTR process and that its staff conveyed
that

this

policy

would

ensure

higher

Medicare

reimbursement.

For the second quarter of 2010, LMH reported a median arrivalto-EKG

time

of

9.3

minutes.

For

at

least

eleven

quarters

beginning in the first quarter of 2011, LMH reported to CMS a
median arrival-to-EKG time of zero minutes.
In 2015 and 2016, LMH submitted Attestations of Compliance
with Section 6032 of the Deficit Reduction Act of 2005 (DRA) for
the previous fiscal years.

The attestations state:

I hereby attest that, as a condition for receiving
payments exceeding $5 million per federal fiscal
year, I have read Section 6032 of the Deficit
Reduction Act of 2005 (the Act), and have examined
the above-named provider / entity's policies and
procedures. Furthermore, the provider / entity
will continue to comply with these provisions to
remain eligible for payment under the Kansas
Medical Assistance Program.
Based on that review, the provider / entity is in
compliance with the requirements of the Act to
educate employees and contractors concerning:
• The Federal False Claims Act established under
sections 3729 through 3733 of Title 31, United
States Code

9

• Administrative remedies for false claims and
statements established under Chapter 38 of Title 31,
United States Code
• State laws pertaining to Medicaid fraud, abuse
• Civil or criminal penalties for false claims and
statements
•
Whistleblower protections under such laws, with
respect to the role of such laws in preventing
and detecting fraud, waste, and abuse in Federal
health care programs
Section 6032 of the DRA provides in part:
that any entity that receives or makes annual payments
under the State plan of at least $5,000,000, as a
condition of receiving such payments, shall-(A) establish written policies for all employees of
the
entity
(including
management),
and
of
any
contractor or agent of the entity, that provide
detailed information about the False Claims Act
established under sections 3729 through 3733 of Title
31, administrative remedies for false claims and
statements established under chapter 38 of Title 31,
any State laws pertaining to civil or criminal
penalties for false claims and statements, and
whistleblower
protections
under
such
laws,
with
respect to the role of such laws in preventing and
detecting fraud, waste, and abuse in Federal health
care programs (as defined in section 1320a-7b(f) of
this title);
(B) include as part of such written policies, detailed
provisions
regarding
the
entity's
policies
and
procedures for detecting and preventing fraud, waste,
and abuse; and
(C) include in any employee handbook for the entity, a
specific
discussion
of
the
laws
described
in
subparagraph (A), the rights of employees to be
protected as whistleblowers, and the entity's policies
and procedures for detecting and preventing fraud,
waste, and abuse;
42 U.S.C. § 1396a(68).
In 2007 and 2009, the LMH Code of Conduct stated that LMH
is required to comply with laws that help prevent fraud and

10

abuse.

Prohibited

knowingly

making

activities

false

or

include

fraudulent

“[i]ntentionally

claims

for

payment

or
or

approval” and “[s]ubmitting false information for the purpose of
gaining

or

retaining

the

right

to

participate

in

a

plan

obtain reimbursement for services,” among other things.

or
The

Code of Conduct stated that if an employee believes that someone
is

conducting

employee

business

should

in

contact

an
a

illegal

supervisor,

officer, or compliance hotline.
reported

fraud

information

would

being

be

unethical
corporate

way,

the

compliance

The Code stated that no one who

retaliated

reported

or

was

against

truthful

long

as

the

the

to

as

best

of

the

person’s knowledge.
IV. FCA STANDARDS
The FCA, 31 U.S.C. § 3729(a)(1), imposes liability against
any

person

who:

(A)

“knowingly

presents,

or

causes

to

be

presented, a false or fraudulent claim for payment or approval;
B) knowingly makes, uses or causes to be made or used, a false
record or statement material to a false or fraudulent claim; . .
. or (G) knowingly makes, uses, or causes to be made or used, a
false record or statement material to an obligation to pay or
transmit

money

conceals

or

obligation
Government.”

or

property

knowingly
to

pay
The

or
FCA

and

to

the

Government,

improperly

transmit
also

money

makes
11

avoids
or

liable

or

or

decreases

property
those

knowingly
an

to

the

persons

who

conspire

to

commit

the

above-described

acts.

31

U.S.C.

§

3729(a)(1)(C).
To prove a false claim under subsections (A) or (B), a
relator must show that defendant:
government;

(3)

that

is

(1) made a claim; (2) to the

materially

false

or

fraudulent;

(4)

knowing of its falsity; and (5) seeking payment from the federal
government.

See U.S. v. The Boeing Company, 825 F.3d 1138, 1148

(10th Cir. 2016).
To

prove

3729(a)(1)(G)

a
a

“reverse
relator

false

must

claim”

under

that:

(1)

show

FCA
the

section
defendant

knowingly made a materially false record or statement; (2) to
improperly avoid or decrease an obligation to pay or transmit
money or property to the government.

See U.S. ex rel. Matheny

v. Medco Health Solutions, Inc., 671 F.3d 1217, 1222 (11th Cir.
2012).
False claims under the FCA may be either factually false or
legally false. Boeing, 825 F.3d at 1148; U.S. ex rel. Lemmon v.
Envirocare of Utah, Inc., 614 F.3d 1163, 1168 (10th Cir. 2010).
A factually false claim involves the submission of an incorrect
description

of

goods

or

services

provided

or

a

reimbursement for goods or services never provided.
F.3d

at

1148;

Lemmon,

614

F.3d

at

1168

request

for

Boeing, 825

(interior

quotation

omitted).

A legally false claim is one which falsely certifies

compliance

with

a

regulation

or
12

contractual

provision

as

a

condition of payment. Boeing, 825 F.3d at 1148; Lemmon, 614 F.3d
at 1168.

A legally false claim may be express or implied.

Boeing, 825 F.3d at 1148.

An express claim occurs upon a false

certification of compliance with a term where compliance is a
prerequisite to payment.

Id.

An implied claim occurs when the

request for payment lacks an express certification, but contains
a knowing and false implication of entitlement to payment.

Id.

“[T]he

for

implied

certification

theory

can

be

a

basis

liability, at least where two conditions are satisfied: first,
the

claim

does

not

merely

request

payment,

but

also

makes

specific representations about the goods or services provided;
and second, the defendant's failure to disclose noncompliance
with material statutory, regulatory, or contractual requirements
makes those representations misleading half-truths.”

Universal

Health Services, Inc. v. United States ex rel. Escobar, 136
S.Ct. 1989, 2001 (2016).

“A statement that misleadingly omits

critical facts is a misrepresentation irrespective of whether
the other party has expressly signaled the importance of the
qualifying information.”

Id.

“[H]alf-truths -— representations

that state the truth only so far as it goes, while omitting
critical

qualifying

misrepresentations.”

information
Id.

at

2000.

—-

can
“Instead

be
of

actionable
adopting

a

circumscribed view of what it means for a claim to be false or
fraudulent, concerns about fair notice and open-ended liability
13

can be effectively addressed through strict enforcement of the
Act's materiality and scienter requirements. Those requirements
are rigorous.”

Id. at 2002 (interior quotations and citation

omitted).
V. LMH’S ARGUMENTS FOR SUMMARY JUDGMENT
A. No false claim
LMH’s

first

argument

for

summary

judgment

contends

that

Duffy cannot prove that LMH submitted an objectively false claim
for payment or used a false record to do so.4

This argument

relates to the main, but not the only, area of dispute -- that
is the data LMH submitted to CMS regarding the “arrival time” of
chest pain patients.

According to LMH, it has submitted its

data in accordance with the CMS Specifications Manuals which
allow listing the EKG time as the arrival time if the EKG time
was the earliest date and time in the record.

Duffy does not

deny that if “the EKG time is the earliest time in the patient’s
Emergency Department record, after all of the other events in
that record having a recorded time have been authenticated, then
the hospital . . . is allowed to report the EKG time as the time
of that patient’s arrival.”

Doc. No. 178, p. 48.

4

But, Duffy

This argument concentrates on whether Duffy can prove a false claim. In the
reply brief, LMH suggests that Duffy has no evidence of payment from the
Government.
Doc. No. 199, p. 60.
The court rejects this somewhat new
argument because LMH has failed to prove that there was no payment in
connection with the alleged false claims and LMH has failed to show that
Duffy cannot supply proof of payment.
In other words, this remains a
material issue of fact upon the record provided to the court.

14

asserts

that

recorded

in

“if
the

times
patient

or

events

record

that
are

are

required

omitted,

to

be

falsified

or

destroyed to make the EKG time appear to be the first event in
the patient record, then that patient record is false” and in
violation of CMS requirements that documentation be timed and
authenticated.

Id. at 48-49.

LMH responds:

“It is common

sense that LMH could not violate the FCA by failing to document
information which they are not required to document.”
199, p. 58 (emphasis added).

Doc. No.

Indeed, LMH contends that Duffy

has no evidence that LMH is required to document in a patient’s
record the forms or cheat sheets or face sheets which Duffy
alleges were omitted or destroyed by LMH.5

5

LMH notes that federal regulations cited by Duffy (42 C.F.R. § 482.24(c))
require that LMH maintain a medical record which contains: “information to
justify admission and continued hospitalization, support the diagnosis, and
describe the patient's progress and response to medications and services.
(1) All patient medical record entries must be legible, complete, dated,
timed, and authenticated in written or electronic form by the person
responsible for providing or evaluating the service provided, consistent with
hospital policies and procedures.
(2) All orders, including verbal orders, must be dated, timed, and
authenticated promptly by the ordering practitioner or by another
practitioner who is responsible for the care of the patient only if such a
practitioner is acting in accordance with State law, including scope-ofpractice laws, hospital policies, and medical staff bylaws, rules, and
regulations.
(3) Hospitals may use pre-printed and electronic standing orders, order sets,
and protocols for patient orders only if the hospital:
(i) Establishes that such orders and protocols have been reviewed and
approved by the medical staff and the hospital's nursing and pharmacy
leadership;
(ii) Demonstrates that such orders and protocols are consistent with
nationally recognized and evidence-based guidelines;
(iii) Ensures that the periodic and regular review of such orders and
protocols is conducted by the medical staff and the hospital's nursing and
pharmacy leadership to determine the continuing usefulness and safety of the
orders and protocols; and
(iv) Ensures that such orders and protocols are dated, timed, and
authenticated promptly in the patient's medical record by the ordering

15

Reading the record in a light most favorable to Duffy, it
appears

that

CMS

intends

the

earliest

Emergency

Department

document be used to determine a patient’s arrival time.

E.g.,

Doc. No. 152-7 pp. 1 and 5 (excerpts from Specifications Manuals
for Hospital Outpatient Department Quality Measures).

Further,

it appears that those documents may include, for example, face
sheets.

See

e.g.,

Doc.

No.

152-6,

pp.

24

and

36

(IQR

Specifications Manual provisions which direct using an Emergency
Department face sheet to document arrival time if it is the
earliest

time);

Doc.

No.

152-7,

pp.

15

and

39

(OQR

practitioner or by another practitioner responsible for the care of the
patient only if such a practitioner is acting in accordance with State law,
including scope-of-practice laws, hospital policies, and medical staff
bylaws, rules, and regulations.
(4) All records must document the following, as appropriate:
(i) Evidence of—
(A) A medical history and physical examination completed and documented no
more than 30 days before or 24 hours after admission or registration, but
prior to surgery or a procedure requiring anesthesia services. The medical
history and physical examination must be placed in the patient's medical
record within 24 hours after admission or registration, but prior to surgery
or a procedure requiring anesthesia services.
(B) An updated examination of the patient, including any changes in the
patient's condition, when the medical history and physical examination are
completed within 30 days before admission or registration. Documentation of
the updated examination must be placed in the patient's medical record within
24 hours after admission or registration, but prior to surgery or a procedure
requiring anesthesia services.
(ii) Admitting diagnosis.
(iii) Results of all consultative evaluations of the patient and appropriate
findings by clinical and other staff involved in the care of the patient.
(iv) Documentation of complications, hospital acquired infections, and
unfavorable reactions to drugs and anesthesia.
(v) Properly executed informed consent forms for procedures and treatments
specified by the medical staff, or by Federal or State law if applicable, to
require written patient consent.
(vi) All practitioners' orders, nursing notes, reports of treatment,
medication records, radiology, and laboratory reports, and vital signs and
other information necessary to monitor the patient's condition.
(vii) Discharge summary with outcome of hospitalization, disposition of case,
and provisions for follow-up care.
(viii) Final diagnosis with completion of medical records within 30 days
following discharge.”

16

Specifications
documentation
Emergency
Department

Manual
which

indicating

reflects

Department
face

and

sheet).

the

intent

processes
making

If,

as

that

is

use

any

in

the

occurred

reference
some

to

to

Emergency

evidence

indicates,

Emergency Department documents or record entries were knowingly
destroyed

or

altered

or

disregarded

to

create

a

false

implication as to the earliest documented time of arrival, then
a material issue of fact exists as whether a false record was
used to support a false claim for payment.6
LMH contends that the Specifications Manuals and pertinent
regulations permit LMH to destroy, alter or disregard Emergency
Department documents to substantiate a different “arrival time”
than would otherwise be the case, as long as such a course is
consistent with hospital policies and procedures.

On the basis

of the record and arguments as they now stand, the court does
not

accept

this

argument.

The

court

acknowledges

that

the

Specifications Manuals make reference to 42 C.F.R. 482.24(c)(1)
which requires that “medical record entries must be legible,
complete,

dated,

timed,

and

authenticated

electronic

form

by

the

person

responsible

evaluating

the

service

provided,

6

in
for

consistent

written

or

providing

or

with

hospital

LMH’s rather general claim that CMS has audited LMH’s reporting three times
since 2010 and found that the threshold for accuracy in reporting was
satisfied is not sufficient to eliminate a question of fact as to accuracy,
given the evidence presented by Duffy and recounted in section III of this
opinion.

17

policies

and

procedures.”

But,

Manuals

suggests

Specifications

which

there

is

that

nothing

a

in

quality

the

measure

involving “arrival time” should be falsely reported or falsely
implied

even

record

keeping

482.24(c)(1)

if

it

is

technically

policies.

indicate

consistent

Rather,

that

it

the

is

a

with

hospital

references

resource

to

to

§

consider

regarding documents dated after the end of the date of service
and

for

records.

questions

concerning

the

authentication

of

medical

See, e.g., Doc. No. 152-10, p. 19.

Next,

LMH

contends

that

its

interpretation

of

the

regulations is “objectively reasonable” and therefore it did not
make a false claim or, at least, knowingly make a false claim.
The

“arrival

Department

time”

document

is
in

based
a

upon

patient’s

the

earliest

record.

The

Emergency
“earliest

Emergency Department document” is a seemingly simple concept and
less ambiguous than the topics discussed in the cases cited by
LMH to support its argument.7

There is evidence in the record

7

LMH cites numerous cases a pp. 25-30 of Doc. No. 152. These cases include
U.S. ex rel. Donegan v. Anethesia Associates of Kansas City, 833 F.3d 874 (8th
Cir. 2016)(regarding the term “emergence” as used in regulations governing
anesthesiologists).
LHM also cites U.S. ex rel. Burlbaw v. Orenduff, 548
F.3d 931, 959 (10th Cir. 2008) which relies upon U.S. ex rel. Morton v. A Plus
Benefits, Inc., 139 Fed.Appx. 980, 983-84 (10th Cir. 2005) for the proposition
that the FCA requires proof of an objective falsehood.
In Orenduff, the
court found an allegedly false letter was unambiguously true. In Morton, the
court found the terms “therapeutic care” and “custodial care” ambiguous in a
factual context involving the care of a premature infant.
LMH also cites
U.S. ex rel. Polukoff v. St. Mark’s Hospital, 2017 WL 237615 (D.Utah
1/19/2017) which involved the apparently debatable issue of when a PFO
closure (a heart procedure) was medically necessary and U.S. ex rel. Hixon v.
Health Management Systems, Inc., 613 F.3d 1186 (8th Cir. 2010) which concerns

18

that Emergency Department documents were destroyed, altered or
disregarded
Department

to

affect

document

the

in

a

time

of

patient’s

the

earliest

record.

Emergency

This

evidence

creates a material issue of fact as to whether LMH’s actions
promulgated a knowingly false claim.8
B. Materiality
LMH

contends

that

summary

judgment

is

warranted

because

Duffy cannot prove that the alleged falsehood communicated by
LMH

was

material

to

receiving

payment

from

the

Government.

“Material” is defined in the FCA as “having a natural tendency
to

influence,

or

be

capable

of

receipt of money or property.”

influencing,

the

payment

31 U.S.C. § 3729(b)(4).

or

There

is evidence in the record, for instance, that pursuant to the
HVBP system “arrival time” data had an influence upon the amount
of government payments LMH received.

While there also may be

evidence that CMS made incentive payments to LMH in spite of a
an issue of statutory interpretation where there was no authoritative
interpretation contrary to that relied upon by the defendant.
8
At p. 37 of Doc. No. 152, LMH argues that Duffy cannot identify any
abstractors who submitted arrival time data to CMS much less that they
knowingly submitted fraudulent data. LMH does not expand upon this argument
to persuade the court that such information is required to create a material
issue of fact as to whether false data was knowingly employed to support a
claim for payment from the Government.
LMH further states at p. 38 that
Duffy cannot identify any specific false claim for reimbursement and that she
relies on “generalities” in her Second Amended Complaint.
The “general”
process of data reporting and value-based purchasing is not disputed by LMH
and the court believes this process, together with the other evidence in the
record, creates a material issue of fact as to whether claims for payment
were made upon the basis of knowingly false information. Nor does the case
cited by LMH, U.S. ex rel. Grandeau v. Cancer Treatment Centers of America,
2003 WL 21504998 (N.D.Ill.6/30/2003), provide convincing support that Duffy
lacked sufficient knowledge to proceed with a FCA claim where Duffy provides
an outline of a fraudulent scheme and gives examples of alleged misconduct.

19

report of Duffy’s allegations, there is some vagueness relating
to the details of the report, who with CMS received it, and how
CMS

reacted.

The

court

concludes

that

the

strength

of

the

evidence submitted by LMH is subject to some reasonable dispute
and, upon the current record, it is insufficient to extinguish
an

issue

Supply,

of

fact.

Inc.,

See

2017

WL

U.S.

ex

1422364

rel.

*21

Scutellaro

(D.D.C.

v.

Capitol

4/19/2017)(“mixed

signals” from GSA officials create issues of material fact as to
materiality);
7626222

U.S.

*12-13

ex

rel.

(C.D.Cal.

government

sometimes

compliance

with

a

Brown

v.

Celgene

12/28/2016)(“[t]he

exercises

its

requirement

discretion

does

not

Corp.,
fact
to

2016

WL

that

the

excuse

non-

establish

that

the

requirement is immaterial as a matter of law”); see also, U.S.
ex rel. Escobar v. Universal Health Servs., Inc., 842 F.3d 103,
109 (1st Cir. 2016)(the Supreme Court’s Escobar decision, 136
S.Ct. 1989 (2016), makes clear that courts are to conduct a
holistic approach to determining materiality in connection with
a

payment

decision,

dispositive”).

with

no

one

factor

being

necessarily

In sum, the court concludes that upon the record

now before it, a material issue of fact exists as to whether
false data or omitted data which misrepresented “arrival times”
was material to claims for money by LMH.

20

C.

Compliance with the Deficit Reduction Act (DRA)

LMH’s next argument concerns Duffy’s claim that LMH falsely
certified compliance with the requirement in the DRA, 42 U.S.C.
§

1396a(68),

information

that
about

LMH,
the

among
False

other

things,

Claims

Act

provide

to

its

detailed

employees.

According to LMH, Duffy and other LMH employees received copies
of the Code of Conduct which committed LMH to compliance with
anti-fraud statutes and prohibited making false or fraudulent
claims for payment or approval, or submitting false information
to

obtain

Conduct

reimbursement

stated

that

retaliated against.

of

services.

anyone

reporting

Further,
fraud

the
will

Code

of

not

be

But, LMH appears to admit that it has not

provided information which refers to the FCA “by name or what it
is and what it does, its definitions of what constitutes a false
claim, how to report violations, how to file [FCA] lawsuits, or
financial
lawsuits.”

incentives

created

by

Doc. No. 199, p. 94.

Congress

to

encourage

such

Upon review of the record

before the court, a reasonable person could conclude that LMH
plainly has not provided the detailed FCA information required
by the DRA, contrary to LMH’s attestations.9

9

Therefore, the

The court’s review of the record includes review of the employee handbooks
which Duffy submitted as exhibits and which LMH mentions in its reply brief.

21

court

rejects

LMH’s

argument

for

summary

judgment

on

this

claim.10
D. Conspiracy
In LMH’s initial brief in support of its motion for summary
judgment,

LMH

conspiracy

makes

claim

the

under

mostly
§

legal

argument

3729(a)(1)(C)

should

that
be

pursuant to the intracorporate conspiracy doctrine.

Duffy’s

dismissed

Most courts

that have considered the matter hold that the intracorporate
conspiracy doctrine applies to FCA actions so that a corporation
cannot be charged with conspiring with its employees to violate
the act.
F.Supp.3d

E.g., U.S. ex rel. Hagerty v. Cyberonics, Inc., 95
240,

269-70

(D.Mass.

2015)(citing

cases

from

many

jurisdictions); U.S. ex rel. Chilcott v. KBR, Inc., 2013 WL
5781660

*10-11

several

courts);

(C.D.Ill.
U.S.

ex

10/25/2013)(reviewing

cases

rel.

Corp.,

Ruhe

v.

Masimo

from
929

F.Supp.2d 1033, 1037-38 (C.D.Cal. 2012).
In response, Duffy asserts that internal emails show that
LMH worked “in collaboration” with a non-employee physician to
engage in false reporting of “throughput” times which measure
the time from the decision to admit a patient to the hospital to
the time the patient departs the Emergency Department.
10

Thus,

In footnote 20 in the reply brief, Doc. No. 199, p. 92, LMH argues that
Duffy lacks the “direct and independent knowledge” of LMH’s alleged
noncompliance with the DRA after 2013 necessary for the court to have
jurisdiction over such a claim. This argument is raised for the first time
in the reply brief and the court shall not address it here.
See Lynn v.
General Elec. Co., 2006 WL 14564 *1 (D.Kan. 1/3/2006).

22

Duffy does not make a legal argument against the application of
the intracorporate conspiracy doctrine, but asserts that there
is evidence of a conspiracy involving LMH and non-employees.
In reply, LMH makes the mostly factual argument that this
evidence

regarding

sufficient

to

“throughput”

reasonably

times

support

and
FCA

a

terminology

is

violation.

not

LMH’s

argument in reply falls within LMH’s overarching contention upon
summary judgment that there is insufficient evidence of a FCA
violation and it relates to the argument made by Duffy in her
response to the summary judgment motion. Nevertheless, although
this is a gray area, the court believes it is fair to categorize
the argument as a new contention against the conspiracy claim.
As suggested in footnote 10, the court in general eschews
the consideration of new arguments in reply briefs.

Therefore,

the court will not consider LMH’s argument in reply here.
OMB

Police

Supply,

Inc.

v.

Elbeco,

Inc.,

2001

WL

681575

See
*3

(D.Kan. 5/11/2001)(declining to consider substantive antitrust
arguments made first in reply brief where original brief only
raised question of whether the plaintiff had properly identified
a

co-conspirator);

Thurston

v.

Page,

931

F.Supp.

765,

768

(D.Kan. 1996)(declining to consider substantive argument first
raised in a reply brief as to whether the plaintiff suffered an
injury, when defendant raised a statute of limitations claim in
the initial brief).
23

E. “Reverse false claim”
Finally,
false

LMH

claim”

argues

under

§

that

Duffy

cannot

3729(a)(1)(G)

prove

because

a

“reverse

Duffy

has

not

identified a sum of money that LMH owes the government which it
has avoided paying.

In response, Duffy contends that LMH was

ineligible for any pay-for-reporting payments during years when
it falsely certified the accuracy and completeness of the OQR
data submitted to CMS.

In reply, LMH asserts that Duffy does

not cite case law to support her contention and does not contest
the case law cited by LMH.
The

current

argumentation

does

not

supply

sufficient

grounds to grant summary judgment against this claim.
3729(a)(1)(G)

makes

liable

“any

person

who

.

.

.

Section
knowingly

makes, uses, or causes to be made or used, a false record or
statement material to an obligation to pay or transmit money or
property to the Government, or knowingly conceals or knowingly
and

improperly

avoids

or

decreases

an

obligation

transmit money or property to the Government.”

to

pay

or

The FCA was

amended in 2009 under the Federal Enforcement Recovery Act to
provide

that

overpayment.”

an

“obligation”

includes

31 U.S.C. § 3729(b)(3).

dates the case law cited by LMH.

“the

retention

of

any

This amendment post-

It either changes or clarifies

the statute to make the knowing retention of an overpayment
sufficient

to

establish

an

obligation
24

to

pay

money

to

the

Government.

See

U.S.

ex

rel.

Prather

v.

Brookdale

Senior

Living, 838 F.3d 750, 774 (6th Cir. 2016); see also U.S. ex rel.
Customs Fraud Investigations, LLC v. Victaulic Company, 839 F.3d
242,

255

obligation

(3rd
is

Cir.

2016)(mere

sufficient

to

knowledge

give

rise

and
to

avoidance

of

liability).

an

This

statutory language appears consistent with Duffy’s reverse false
claim argument.

Therefore, the court finds that LMH has failed

to demonstrate on the record before the court that Duffy cannot
prove a reverse false claim.
VI. CONCLUSION
In conclusion, the court shall grant the unopposed motion
for leave to file excess pages (Doc. No. 198) and, for the
above-stated

reasons,

summary judgment.

the

court

shall

deny

LMH’s

motion

Doc. No. 151.

IT IS SO ORDERED.
Dated this 7th day of July, 2017, at Topeka, Kansas.

s/Sam A. Crow
Sam A. Crow, U.S. District Senior Judge

25

for