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
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