USA v. Fadul et al

Filing 34

MEMORANDUM OPINION. Signed by Chief Judge Deborah K. Chasanow on 2/28/13. (Chasanow, Deborah) Modified on 2/28/2013 (c/m to Defendant Price 2/28/13 sat) (rss, Deputy Clerk).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
UNITED STATES OF AMERICA
:
v.

:

Civil Action No. DKC 11-0385

:
ABDUL FADUL, et al.
:
MEMORANDUM OPINION
Presently pending and ready for review in this healthcare
fraud case is the unopposed motion for summary judgment filed by
the United States of America (“the Government”).
The

issues

have

been

briefed,

hearing being deemed necessary.

and

the

court

(ECF No. 31).
now

Local Rule 105.6.

rules,

no

Because the

evidence establishes that the Government is entitled to judgment
as a matter of law only as to its claim for payment by mistake
of fact against Defendant Cardio Vascular Center (“CVC”), the
motion will be granted in part and denied in part.
I.

Background
A.

Factual Background

This case arises out of the billing practices of CVC, an
entity owned by Defendant Abdul Fadul, M.D.

Except as otherwise

noted, the following facts are undisputed, as drawn from the
evidence

submitted

by

the

Government

(including

the

interrogatory responses of Dr. Fadul and CVC) and the admissions
and denials made by Dr. Fadul and CVC in their answer.

1.

CVC & Its Business Model

Dr. Fadul is a licensed cardiologist who practiced medicine
in the state of Maryland until 2009.

(ECF No. 31-3, at 3).

In

addition to his personal medical practice, Dr. Fadul owned CVC,
a limited liability company organized under the laws of the
(ECF No. 31-30, at 8).1

state of Maryland that closed in 2009.

At all times relevant to this action, Dr. Fadul served as CVC’s
operating

officer,

officers.

(Id. at 2).

CVC

provided

and

the

mobile

entity

had

diagnostic

no

other

services

or

residents

to

members

of

nursing homes in the greater District of Columbia region.
business model generally functioned as follows.

CVC’s

(See generally

ECF No. 31-4, Hales Aff.; ECF No. 31-16, Mathews Aff.).

When a

treating physician ordered an imaging test (e.g., an ultrasound)
to be performed on a nursing home resident, the nursing home
contacted CVC to perform the test.
the

physician’s

technicians
chart,

to

confirm

requested.

order,

visit
the
After

the

CVC

After obtaining a copy of

assigned

nursing

physician’s
completing

1

one

home,

of

review

its
the

order,

and

perform

a

test,

the

mobile

patient’s
the

test

technician

In the complaint and first amended complaint, the
Government alleged that CVC is a partnership owned by Dr. Fadul
and his wife.
(ECF No. 1 ¶ 10; ECF No. 15 ¶ 11).
In its
interrogatory answers, however, CVC represents that it is a
single-member limited liability company. (ECF No. 31-30, at 8).
2

electronically transferred the results to a radiologist who had
been assigned by CVC to read the test and produce a report.
Neither

the

employed

mobile

by

CVC,

technicians
but

nor

instead

the

radiologists

functioned

as

were

independent

contractors who received compensation on a per-test basis.
this

end,

technicians

submitted

daily

log

sheets

indicating the tests they had performed that day.

to

To
CVC

CVC used

these log sheets to compensate the technicians and (as discussed
in detail below) for billing purposes.
In exchange for its services, CVC received the patient’s
right to reimbursement from his or her health insurance company.
Many of the patients who received services from CVC participated
in

either

the

Medicare

or

Medicaid

Programs.2

To

reimburse

health care providers, private and public insurers (including
Medicare

and

Medicaid)

use

an

alphanumeric

coding

system

established by the American Medical Association and published in
the

Current

Procedural

Terminology

(“CPT”).

Each

CPT

code

consists of five digits and corresponds directly with a medical
procedure for which the insurer provides payment.

2

For example,

Medicare is a 100% federally subsidized health insurance
system for disabled persons and persons who are 65 or older that
allows
enrollees
to
be
reimbursed
for
80%
of
medical
expenditures or to assign the right to reimbursement to a
healthcare provider. Medicaid is a similar program in which the
federal government and the fifty States share the cost of
medical services provided to qualifying disadvantaged persons
and families.
3

CPT 76700 corresponds to “Ultrasound, abdominal, real time with
image documentation; complete.”

(ECF No. 31-26, at 13).

AMA publishes a new set of CPT codes each year.
Duszak Report, at 4).
served

as

the

The

(ECF No. 31-23,

Dr. Fadul avers that Maryann Ayers, who

office

manager

for

his

personal

practice,

purchased a CPT manual every year to serve as a reference “for
both CVC and [his personal] office to check the codes in use and
to check for new updates.”

(ECF No. 31-3, at 7).

According to the Government’s expert, the introduction to
the CPT manual instructs healthcare providers to “[s]elect the
name of the procedure or service that accurately identifies the
service

performed.

approximates

the

Report, at 4).
service

or

service

not

select

provided.”

a

CPT
(ECF

code
No.

that

merely

31-23,

Duszak

The same instructions also advise that “[a]ny

procedure

medical record.”

Do

should

(Id.).

be

adequately

documented

in

the

In the field of radiology, the Centers

for Medicare and Medicaid Services generally require an order
from a patient’s treating physician to perform imaging tests in
the non-hospital setting.

(Id. at 2).

CVC used billing software called Medical Mastermind to bill
insurance companies (including Medicare and Medicaid) for its
services.

(ECF No. 31-4, Hales Aff. ¶ 10).

CVC’s billing

department inputted the tests listed in a technician’s log sheet
using non-CPT alphanumeric codes that were unique to Medical
4

Mastermind.

(Id.).

Upon the entry of certain singular Medical

Mastermind codes, CVC’s billing system automatically rendered
two CPT codes to be billed to the insurer for reimbursement.
(Id.).

The

instant

lawsuit

arises

from

CVC’s

automatic

“combination” billing of CPT codes for two types of tests.
2.

CVC’s Billing Practices for Abdominal Ultrasounds

The

first

practice

at

issue

in

this

lawsuit

is

CVC’s

billing of abdominal ultrasounds during the period from 2004
through 2009.
she

had

When a technician indicated on her log sheet that

performed

an

abdominal

ultrasound,

the

CVC

billing

department selected the Medical Mastermind code “ABD1.”

(ECF

No.

code

31-4,

Hales

Aff.

¶ 11).

Selecting

this

single

automatically caused both CPT 76700 (abdominal ultrasound) and
CPT 76770 (retroperitoneal ultrasound) to be billed.
The

Government

presents

evidence

(Id.).

establishing

that

CPT

76700 and CPT 76770 describe two distinct tests that require
separate physician orders and are rarely performed on the same
patient on the same date.

From 2005 to 2009, the CPT manuals

stated that “[a] complete ultrasound examination of the abdomen
(76700) consists of real time scans of the liver, gall bladder,
common

bile

abdominal

duct,

aorta

pancreas,
and

spleen,

inferior

vena

demonstrated abdominal abnormality.”
6, & 8).

kidneys,
cava

and

the

including

upper
any

(ECF No. 31-26, at 2, 4,

By contrast, the manuals stated that “[a] complete
5

ultrasound examination of the retroperitoneum (76770) consists
of real time scans of the kidneys, abdominal aorta, common iliac
artery

origins,

demonstrated
Government’s

and

inferior

retroperitoneal
expert,

Dr.

vena

cava,

Richard

Duszak,

any

(Id.).3

abnormality.”

including

The

Jr.,

M.D.,

explains

that “[a]lthough structures in the abdomen and retroperitoneum
overlap in part, dedicated ultrasound studies of these regions
are readily identifiable as separate and distinct to even entry
level imaging professionals.”

(ECF No. 31-23, at 2-3).

Duszak

in

further

opines

that,

clinical

practice,

Dr.

it

is

“exceedingly rare” for both tests to be ordered for or performed
on the same patient on the same date.

(Id.).

Thus, according

to Dr. Duszak, although “there is some overlap of body parts
between abdominal and retroperitoneal ultrasound examinations,”
the CPT manual’s instructions “require[] the use of the code
which

accurately

describes

the

services

performed”

and

“preclude[] ‘double dipping’ for component services nominally
described in parts of two codes.”
Dr.
several

Duszak’s
former

CVC

opinion
mobile

is

(Id. at 5).

supported

technicians.

3

by

the

For

testimony

example,

of

Donna

The CPT manuals in place from 2003 through 2006 describe
CPT 76700 as “Ultrasound, abdominal, B-scan and/or real time
with image documentation; complete.”
(ECF No. 31-26, at 2, 4,
6, & 8).
The same manuals describe CPT 76770 as “Ultrasound,
retroperitoneal (eg, renal, aorta, nodes), B-scan and/or real
time with image documentation; complete.” (Id.).
6

Mathews, who served as the head technician, avers that CPT 76700
and CPT 76770 are codes for different tests.
Mathews Aff. ¶ 9).

(ECF No. 31-16,

Ms. Mathews and another CVC technician also

aver that CVC rarely received physician orders to perform both
tests on the same patient and they never performed tests without
a physician’s order.
¶¶ 5, 7).
only

(Id. ¶¶ 7, 9; ECF No. 31-19, Collins Aff.

Ms. Mathews further testifies that CVC technicians

received

payment

for

one

study

when

they

performed

an

abdominal ultrasound and that “only [an abdominal ultrasound]
should have been billed.”

(ECF No. 31-16, Mathews Aff. ¶ 9).

Nonetheless, on 2,090 occasions during the period from 2004
to 2009, CVC requested reimbursement from Medicare for both CPT
76700 and CPT 76770 for the same patient on the same date of
service.

(ECF No. 31-35, Marrero Aff. ¶ 13).

Medicare paid out

$145,010.09 for services billed as CPT 76770 as a result of
these claims.

(Id.).

During the same period, CVC submitted 202

such requests to Medicaid, resulting in reimbursements for CPT
76770 totaling $11,544.24.
The

Government

(ECF No. 31-32, Hammond Aff. ¶ 7).

identified

several

statistically

valid

random samples of these claims and subpoenaed the corresponding
medical records to perform an audit.
Aff. ¶¶ 14, 15).

(ECF No. 31-35, Marrero

As to those claims for which it obtained

medical records, the Government concluded that there “was no
justification

for

any

of

the
7

complete

retroperitoneal

ultrasounds (CPT code 76770) billed by CVC . . . because there
was no separate radiology reports for these services or any
physician orders for these services.”

(Id. ¶ 18).4

3.

CVC’s Billing Practices for Duplex Ultrasound Tests of
Extremity Veins

The

second

practice

ultrasound

tests

duplex
2009.

at

issue

during

the

here

is

period

CVC’s
from

billing

2004

of

through

When a CVC technician indicated on her log sheet that she

had performed a bilateral lower extremity venous study, the CVC
billing department selected the Medical Mastermind code “VEN1.”
(ECF No. 31-4, Hales Aff. ¶ 11).

Selecting this single code

automatically caused both CPT 93970 (venous duplex ultrasound,
bilateral)

and

CPT

93965

(non-invasive

physiologic

extremity veins) to be billed to the patient’s insurer.

study

of

Similar

results occurred when a CVC technician reported that she had
performed a unilateral lower extremity venous study:

the CVC

billing department selected the Medical Mastermind code “VEN2,”
which

caused

both

CPT

93971

(venous

duplex

ultrasound,

unilateral) and CPT 93965 to be billed.

4

As a result of this audit, the Government also concluded
that nearly all of the complete abdominal ultrasounds (i.e., CPT
code 76700) billed by CVC “did not meet all the elements of a
complete abdominal ultrasound” and should have been billed as
partial abdominal ultrasounds.
(ECF No. 31-35, Marrero Aff.
¶ 18). The Government is not, however, seeking any damages here
as a result of this apparent upcoding.
8

Here again, the Government presents evidence establishing
that CPT 93970/93971 and CPT 93965 describe two different tests.
From 2003 to 2009, the applicable CPT manuals described 93965 as
“[n]on-invasive physiologic studies of extremity veins, complete
bilateral study.”

(ECF No. 31-27, at 2, 4, 6, 8, 10, 12).

By

contrast, the same CPT manuals described CPT 93970 and CPT 93971
as “[d]uplex scan[s] of extremity veins including responses to
compression

and

other

maneuvers”

bilaterally or unilaterally.

that

(Id.).

are

performed

either

Dr. Duszak explains that,

although the two tests “involve evaluation of the same anatomic
structures
vascular

(i.e.,

extremity

studies

are

veins),”

noninvasive

“distinctly

different

ultrasound[s]” because of the technology involved.
23, at 2-3).
physiologic
facilities

from

duplex

(ECF No. 31-

Indeed, Dr. Duszak represents that noninvasive
vascular

because

technology.

physiologic

(Id.).

of

studies
the

are

rarely

superiority

of

used

in

duplex

modern

ultrasound

Dr. Duszak further opines that, in clinical

practice, it is “exceedingly rare” to perform both tests on the
same patient on the same date.

(Id.).

Dr. Duszak also states

that it is “incorrect and inappropriate” to bill CPT code 93965
to “describe the compression and maneuvers performed as part of
duplex ultrasound” tests billed as CPT 93970/93971.
Here

again,

Dr.

Duszak’s

opinions

testimony of former CVC technicians.
9

are

(Id. at 6).

supported

by

the

Ms. Mathews, the lead CVC

technician, represents that CPT 93970/93971 and CPT 93965 are
different tests that “should only be billed together if there is
a doctor’s order for each.”

(ECF No. 31-16, Mathews Aff. ¶ 10).

Additionally, three other former CVC technicians aver that they
“never” performed plethysmographies, another name for the test
described by CPT 93965.

(ECF No. 31-19, Collins Aff. ¶ 7; ECF

No. 31-20, Hudock Aff. ¶ 4; ECF No. 31-21, Newell Aff. ¶ 5).
Nonetheless,

on

10,801

occasions

during

the

period

from

2004 through 2009, CVC requested reimbursement from Medicare for
both CPT 93965 and CPT 93970/93971 for the same patient on the
same

date

of

service.

(ECF

No.

31-35,

Marrero

Aff.

¶ 13).

Medicare paid out $588,521.61 for services billed as CPT 93965
as a result of these claims.
CVC

submitted

645

such

(Id.).

requests

to

During the same period,
Medicaid,

payments for CPT 93965 totaling $17,433.47.
Hammond Aff. ¶ 8).

resulting

in

(ECF No. 31-32,

Based on an audit of the medical records

associated with certain randomly selected claims, the Government
concluded that “[t]here was no justification for any of the
complete bilateral noninvasive physiological study of extremity
veins (CPT code 93965) billed by CVC in the samples because
there were no separate radiology reports for these services or
any

physician

orders

for

these

Marrero Aff. ¶ 18).

10

services.”

(ECF

No.

31-35,

4.
It

Dr. Fadul’s Involvement
is

undisputed

operator of CVC.
the

Medicare

that

Dr.

Fadul

is

the

sole

owner

and

In this capacity, Dr. Fadul enrolled CVC in

program

as

an

Independent

Diagnostic

Facility (“IDTF”) from at least 1999 to 2009.
Marrero Aff. ¶ 22).

Testing

(ECF No. 31-35,

Doing so required Dr. Fadul to sign certain

statements acknowledging his familiarity with Medicare laws and
regulations and affirming his intent to abide by them.
id.; ECF Nos. 31-42, 31-43, & 31-44).

(See

Dr. Fadul also agreed

that he would not present or cause to be presented any false or
fraudulent claims.
In

their

(ECF No. 31-43, at 2).

joint

answer

to

the

Government’s

original

complaint (which, as discussed below, has now been superseded by
an amended complaint), Dr. Fadul and CVC admitted some of the
Government’s

allegations.

(ECF

No.

14

¶ 4).

Specifically,

Defendants admitted (1) that CPT 76700 and CPT 76770 describe
different tests; (2) that CVC automatically rendered bills for
both codes when only the abdominal ultrasound was ordered and
performed; (3) that Dr. Fadul “caused CVC to establish” these
automatic combination billing practices; and (4) that Medicare
and Medicaid paid CVC $166,858.55 for services billed as CPT
76770 that were not actually rendered.
time,

however,

Dr.

Fadul

and

CVC

(Id.).

denied

the

At the same
more

specific

allegations relating to CPT 76700 and CPT 76770, including that
11

“Dr. Fadul was well aware that it was false and fraudulent to
bill

CPT

76700

together

with

76770

physician calling for both tests.”

absent

an

(Id.).

order

from

a

Dr. Fadul and CVC

also denied all allegations regarding CPT 93965.

(Id.).

In addition to these contradictory admissions and denials,
the record contains conflicting evidence about the extent of Dr.
Fadul’s

involvement

in

instituting

and

combination billing practices at issue.
answers,

Dr.

Fadul

involved

in

the

represents
actual

that

billing”

he

maintaining

the

In his interrogatory
“did

but

not

usually

instead

get

entrusted

responsibility for billing and CPT coding to Tina Hales, CVC’s
office manager, and Paula Price, CVC’s marketing director who
worked on a commission basis.

(ECF No. 31-3, at 6).5

Dr. Fadul

also avers that “I believed we were in compliance with both
State and Federal health laws in CVC’s billing practices” based
on his staff’s yearly review of the new CPT manual and the
software updates provided by Medical Mastermind.
30, at 3-4).

(ECF No. 31-

Dr. Fadul also represents that Ms. Price “checked

with several lawyers on many occasions to be sure we were in
compliance with Medicare rules and regulations” and states that

5

Dr. Fadul refers to CVC’s marketing manager as “Paula
Pincus” in his interrogatory answers.
(ECF No. 31-3, at 4-5).
The court assumes that “Paula Pincus” is Paula Price, who the
Government named as an additional defendant in its first amended
complaint. (See ECF No. 15).
12

“[t]he fact that [Ms. Price] was married to [a] judge and his
circle are lawyers caused me to always be assured that we were
in compliance.”
does

“not

(Id. at 9).

know

how

to

Dr. Fadul further avers that he

explain”

the

irregularities

in

CVC’s

billing codes, but notes that no similar issues were discovered
in his personal practice, where no one worked on a commission
basis.

(Id. at 6).

causing

CVC’s

Ms. Price denies that she had any role in

automatic

combination

billing

practices.

(See

generally ECF No. 25).
In contrast to Dr. Fadul’s representations, the Government
presents

evidence

that

billing activities.

he

was

intimately

involved

in

CVC’s

Ms. Hales avers that Dr. Fadul “was a hands

on manager when it came to billing” in that he looked at all
mail

relating

to

billing,

insurance companies.

including

denials

of

claims

(ECF No. 31-4, Hales Aff. ¶ 15).

from

Some of

the correspondence that Dr. Fadul reviewed was sent by CareFirst
BlueCross BlueShield (“BCBS”), a private insurer.

(Id.).

In

December 2004, BCBS placed CVC and Dr. Fadul’s other clinics on
pre-payment review because of questionable billing practices.
(ECF No. 31-12, Straight Aff. ¶ 4).6

6

Pre-payment review requires

Specifically, BCBS had concerns that Dr. Fadul’s entities
were:
(1) billing for services that were not medically
necessary; (2) upcoding their services (i.e., billing for a
higher level of service than was actually provided); and
(3) unbundling their services (i.e., billing separately for
13

a

healthcare

provider

to

submit

documentation

supporting

the

medical necessity of all services for which reimbursement is
sought.

(Id.

¶ 5).

In

CVC’s

case,

BCBS

retained

medical

experts to review the company’s claims and then made payment
decisions “on a case-by-case basis.”

(Id. ¶ 6).

When BCBS’s experts reviewed the documentation supporting
CVC’s claims for both CPT 76700 (abdominal ultrasound) and CPT
76770 (retroperitoneal ultrasound), “it was clear that only an
abdominal ultrasound had been requested and only an abdominal
ultrasound had been performed.”
¶ 7).

(ECF No. 31-12, Straight Aff.

Accordingly, BCBS reimbursed CPT 76700 and rejected CPT

76770.

(Id.).

The earliest written denial for CPT 76770 is

dated October 8, 2008.

(ECF No. 31-15, at 2).

BCBS’s pre-

payment review of CVC’s claims for both CPT 93970/93971 and CPT
93965 led to similar results:

because the reviewing surgeon

concluded that CPT 93965 was not medically necessary and had not
actually

been

performed,

BCBS

reimbursed

CVC

93970/93971 and rejected payment for CPT 93965.

only

for

CPT

(ECF No. 31-12,

individual components of a single service in order to increase
payment from the insurer). (ECF No. 31-12, Straight Aff. ¶ 4).
It is not clear, however, that the specific billing practices at
issue in this lawsuit had any role in BCBS’s initial decision to
place Dr. Fadul’s various practices on pre-payment review.
14

Straight Aff. ¶ 8).

The earliest written denial for CPT 93965
(ECF No. 31-14, at 1).7

is dated July 22, 2008.

The Government also presents evidence that CVC employees
approached

Dr.

Fadul

on

at

least

three

occasions

concerns about billing CPT 76770 with CPT 76700.

to

raise

First, Ms.

Hales avers that her predecessor, Lara Kinsey, “raised questions
about

billing”

the

two

codes

together

7

with

Dr.

Fadul

after

In addition to the written denials, Charlotte Straight, a
senior nurse audit specialist with BCBS, avers that she had
multiple interactions with members of CVC’s billing staff
regarding CVC’s “practice of routinely submitting codes for
services that were neither ordered nor performed.” (ECF No. 3112, Straight Aff. ¶ 7). As to the content and timing of these
interactions, however, Ms. Straight avers that “[i]t is not
possible to recall all of the contacts . . . because they were
often part of conversations involving claims for multiple
patients, some of which did not involve CVC services.”
(Id.
¶ 10). Ms. Straight did keep a case log relating to Dr. Fadul’s
various clinics, including CVC. (Id. ¶ 5). Based on this case
log and her independent recollection, Ms. Straight testifies
about a few specific conversations. With respect to CPT 76770,
Ms. Straight recalls that, on May 5, 2008, she spoke with Ms.
Ayers (the office manager for Dr. Fadul’s personal clinic) about
billing for CPT 76770 when only CPT 76700 was ordered or
reported.
(Id. ¶ 12).
In her case log notes, Ms. Straight
recorded Ms. Ayers as stating that “Dr[.] Fadul says they have
to bill that way and yells at them if they don’t.”
(ECF No.
31-13, at 58).
Ms. Straight also recalls that, on January 14,
2009, she reiterated to Kim Haynie in CVC’s billing department
that “CPT 76770 should only be submitted if that test had been
requested and performed.” (ECF No. 31-12, Straight Aff. ¶ 14).
With respect to CPT 93965, Ms. Straight recalls that, “sometime
in 2005,” she told CVC office manager Chris Bowles that it was
not appropriate to bill CPT 93965 with CPT 93970/93971.
(Id.
¶ 10). Ms. Straight also recalls that she spoke with Ms. Haynie
on May 23, 2006 and explained that it was “not appropriate” for
CVC to consistently bill for CPT 93965. (Id. ¶ 11). Except as
detailed below, it is not clear whether Dr. Fadul was personally
aware of Ms. Straight’s conversations with CVC staffers.
15

reviewing the CPT manual.

(ECF No. 31-4, Hales Aff. ¶ 14).

Dr.

Fadul instructed Ms. Kinsey “to continue billing them together.”
(Id.).

It is not clear when this exchange occurred, however;

Ms. Hales avers only that it occurred “even before BCBS told us
not to do this.”

(Id.).

Second, Ms. Hales avers that, in 2007,

Kim Haynie (a member of CVC’s billing staff) told her and Dr.
Fadul that BCBS had advised CVC that it could not bill for both
CPT 76700 and CPT 76770 unless a physician ordered both tests.
(ECF No. 31-4, Hales Aff. ¶ 12).

According to Ms. Hales, Dr.

Fadul responded by instructing CVC employees to “get an order
for both studies.”

(Id. ¶ 12).

After “it became clear that

getting the order for both was not working,” Dr. Fadul advised
Ms. Hales to “continue to bill both codes and if BCBS denies
76770 to write it off.”

(Id.).

Ms. Hales also testifies that

CVC continued to bill both codes to Medicare “because Dr. Fadul
said that if they were paying [the claims] they must be okay.”
(Id.).

Third, Ms. Ayers recalls that, at some unknown date, she

approached Ms. Hales and Dr. Fadul about billing CPT 76770 with
CPT 76700 for tests performed in Dr. Fadul’s personal clinics.
(ECF No. 31-28, Ayers Aff. ¶ 5).

Ms. Ayers represents that,

notwithstanding BCBS’s instructions to the contrary, “Dr. Fadul
told me to continue to bill 76700 and 76770 when we did only an
abdominal ultrasound.”

(Id.).

16

With

respect

to

CPT

93965,

Ms.

Mathews

–

the

head

CVC

technician – avers that, in July 2009, Dr. Fadul asked her about
billing CPT 93965 with CPT 93970/93971.
Aff. ¶ 11).

(ECF No. 31-16, Mathews

Ms. Mathews told Dr. Fadul that it was not correct

to bill the codes together.

(Id.).

Ms. Mathews avers that

someone at another mobile ultrasound company also told Dr. Fadul
that it was inappropriate to bill the codes together.
B.

(Id.).

Procedural Background

On February 14, 2011, the Government filed suit against CVC
and Dr. Fadul alleging two counts under the False Claims Act, 31
U.S.C. § 3729 et seq., as well as common law claims for fraud,
breach

of

fiduciary

mistake of fact.
and

CVC

filed

an

unjust

(ECF No. 1).
a

described above.
filed

duty,

amended

joint

and

payment

by

On November 21, 2011, Dr. Fadul

answer,

(ECF No. 14).
complaint

enrichment,

the

contents

of

which

are

The next day, the Government

adding

Ms.

marketing director of CVC, as a defendant.

Price,

the

former

(ECF No. 15).

The

amended complaint alleges that Ms. Price used her prior work
experience with CPT codes to establish the fraudulent billing
systems at CVC along with Dr. Fadul.

8

(Id. ¶ 2).8

On December

The amended complaint also asserts that CVC violated the
False Claims Act when Ms. Price knowingly used non-credentialed
imaging technicians in violation of the Medicare regulations
governing IDTF’s.
(ECF No. 15 ¶¶ 49-55).
The Government does
17

27, 2011, Ms. Price answered the first amended complaint.
No. 25).

(ECF

Neither Dr. Fadul nor CVC filed an amended answer.

On May 18, 2012, the Government filed the instant motion
seeking

summary

judgment

as

to

its

False

Claims

Act

counts

against Dr. Fadul and CVC and, in the alternative, as to its
common law counts for unjust enrichment and payment by mistake
of fact.
a

letter

(ECF No. 31).9
indicating

Counsel for Dr. Fadul and CVC submitted

that

neither

Defendant

opposition to the Government’s motion.
II.

would

file

an

(ECF No. 33).

Standard of Review
Summary judgment may be entered only if there is no genuine

issue as to any material fact and the moving party is entitled
to judgment as a matter of law.

Fed.R.Civ.P. 56(a); Celotex

Corp. v. Catrett, 477 U.S. 317, 322 (1986); Emmett v. Johnson,
532

F.3d

291,

297

(4th

Cir.

2008).

Summary

judgment

is

inappropriate if any material factual issue “may reasonably be
resolved in favor of either party.”

Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 250 (1986); JKC Holding Co. LLC v. Wash.

not address
judgment.

these

allegations

9

in

its

motion

for

summary

The Government’s motion does not seek any relief as to Ms.
Price.
On April 10, 2012, the Government submitted a status
report stating that “[t]he case against Paula Price has been
resolved.” (ECF No. 27). To date, however, the Government has
not submitted a stipulation or request for dismissal of its
claims against Ms. Price in accordance with Fed.R.Civ.P. 41(a).
18

Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001).

Where,

as here, the nonmoving party fails to respond, the requested
relief

may

56(e)(2).

not

automatically

be

granted.

See

Fed.R.Civ.P.

Rather, the court must “review the motion, even if

unopposed, and determine from what it has before it whether the
moving party is entitled to summary judgment as a matter of
Custer v. Pan Am. Life Ins. Co., 12 F.3d 410, 416 (4th

law.”

Cir. 1993).
III. False Claims Act
The

Government

first

seeks

summary

judgment

against

Dr.

Fadul and CVC with respect to its claims under two provisions of
the False Claims Act, 31 U.S.C. § 3729(a)(1)(A) and (B).

Under

Subsection 3729(a)(1)(A), a person is liable if he “knowingly
presents, or causes to be presented, a false or fraudulent claim
for payment or approval.”

Under Subsection 3729(a)(1)(B), a

person is liable if he “knowingly makes, uses, or causes to be
made or used, a false record or statement material to a false or
fraudulent claim.”10

In order to prevail under either of these

10

The Government apparently assumes that most recent
version of the False Claims Act, as amended by the Fraud
Enforcement and Recovery Act of 2009, Pub.L. No. 111–21, 123
Stat. 1617 (“FERA”), applies here.
FERA renumbered the
provisions of § 3729(a) and added a materiality requirement to
what is now § 3729(a)(1)(B) (formerly § 3729(a)(2)).
There is
some dispute over the retroactive effect of these amendments,
particularly the new materiality requirement. See United States
v.
Kernan
Hosp.,
880
F.Supp.2d
676,
685
(D.Md.
2012)
19

provisions in the Fourth Circuit, the Government must show the
following:
(1)

that
the
defendant
statement or engaged
course of conduct;

made
a
false
in a fraudulent

(2)

such statement or conduct was made or
carried
out
with
the
requisite
scienter;

(3)

the statement or conduct was material;
and

(4)

the statement or conduct caused the
government to pay out money or to
forfeit money due.

United States ex rel. Harrison v. Westinghouse Savannah River
Co., 352 F.3d 908, 913 (4th Cir. 2003) (“Harrison II”).

As the

Government does in its motion, each of these elements will first
be analyzed with respect to CVC’s liability as an entity.
1.

Falsity

To establish the first element under the False Claims Act,
the alleged statement or conduct must represent an “objective

(summarizing split of authority). For purposes of this action,
it is not necessary to resolve this dispute because the court
“can discern no material difference” among the different
versions of the statute that might affect the outcome here. Id.
Moreover, even before FERA, the Fourth Circuit required a False
Claims Act plaintiff to prove materiality.
See Harrison v.
Westinghouse Savannah River Co., 176 F.3d 776, 787 (4th Cir.
1999) (“Harrison I”) (“Liability under the False Claims Act is
subject to the further, judicially imposed requirement that the
false statement or claim be material.”).
20

and verifiable falsehood.”

United States v. Kernan Hosp., 880

F.Supp.2d 676, 688 (D.Md. 2012).

“In the paradigmatic case, a

claim is false because it ‘involves an incorrect description of
goods or services provided or a request for reimbursement for
goods or services never provided.’”

United States v. Sci. Apps.

Int’l Corp., 626 F.3d 1257, 1266 (D.C.Cir. 2010) (quoting Mikes
v. Straus, 274 F.3d 687, 697 (2d Cir. 2001)); see also United
States
371327,

ex
at

rel.

Armfield

*3

(M.D.Fla.

v.

Gills,

Jan.

30,

No.
2013)

07-cv-2374,

2013

(explaining

WL

that

a

request for reimbursement submitted to Medicare may be false if
it

seeks

claimed”)

payment

for

(internal

services

quotation

that

marks

“were

not

omitted).

rendered

as

Importantly,

however, “imprecise statements or differences in interpretation
growing out of a disputed legal question are . . . not false
under the [False Claims Act].”

United States ex rel. Wilson v.

Kellogg Brown & Root, Inc., 525 F.3d 370, 377 (4th Cir. 2008)
(internal quotation marks omitted).
Based on the present record, there is no genuine issue of
material fact that, during the period from 2004 through 2009,
CVC submitted objectively false claims to Medicare and Medicaid
by requesting reimbursement for services that were never ordered
or

performed.

submitted

claims

Specifically,
containing

the

evidence

objective

shows

falsehoods

that
when

CVC
it

requested reimbursement for both CPT 76700 and CPT 76770 on the
21

same

date

of

service

for

the

same

patient

when

the

test

described by CPT 76770 (a retroperitoneal ultrasound) had not
been ordered or performed.
CVC

submitted

claims

Likewise, the evidence shows that

containing

objective

falsehoods

when

it

requested reimbursement for both CPT 93970/93971 and CPT 93965
on

the

date

described

by

of

service

CPT

93965

for
(a

the

same

patient

non-invasive

when

physiologic

the

test

study

of

extremity veins) had not been ordered or performed.
Indeed, the Government provides ample evidence to support
the falsity of CVC’s claims.
expert

report

represent

explaining

clinically

First, the Government submits an

that

distinct

the

CPT

procedures

codes

at

that

issue

are

rarely,

ever, performed on the same patient on the same date.
the

Government

offers

the

testimony

of

former

CVC

here
if

Second,
employees

establishing that they rarely performed the test described by
CPT 76770 and never performed the test described by CPT 93965.
Third, the Government offers the results of an audit of the
medical records that correspond with certainly randomly selected
claims submitted by CVC during the period from 2004 to 2009.
For each of these claims, the Government concluded that CVC
lacked justification for billing CPT 76770 or CPT 93965 because
the tests described by those codes had not been performed.

By

contrast, CVC fails to present any reasoned explanation that
would justify seeking payment for these codes where the tests
22

they

describe

had

not

been

ordered

or

performed.

Thus,

a

reasonable jury could not find that CVC’s billing practices were
appropriate

under

these

circumstances,

and

the

Government

satisfies its burden with respect to establishing falsity.
2.
To

Scienter
satisfy

the

second

False

Claims

Act

element,

the

Government must show that those responsible for submitting an
objective falsehood acted knowingly in so doing.

United States

ex rel. Becker v. Westinghouse Savannah River Co., 305 F.3d 284,
288 (4th Cir. 2002).

The False Claims Act defines “knowingly” to

mean that “a person, with respect to information”:
(i)

has
actual
information;

knowledge

of

the

(ii)

acts in deliberate ignorance of the
truth or falsity of the information;
or

(iii) acts in reckless disregard of the
truth or falsity of the information[.]
31 U.S.C. § 3729(b)(1)(A).
any

one

of

deliberate
require

any

three

ways

ignorance,
“proof

§ 3729(b)(1)(B).

or
of

Thus, scienter can be established in
(i.e.,

proof

reckless
specific

“Congress,

of

actual

disregard)
intent

however,

to
has

and

knowledge,
does

not

defraud.”

Id.

made

its

plain

intention that the act not punish honest mistakes or incorrect
claims submitted through mere negligence.”

23

United States ex

rel. Owens v. First Kuwait Gen. Trading & Contracting Co., 612
F.3d 724, 728 (4th Cir. 2010) (internal quotation marks omitted).
When the Government seeks to hold an entity liable under
the False Claims Act, it cannot rely on the collective knowledge
of the entity’s agents to establish scienter.

See Harrison II,

352 F.3d at 918 n. 9 (rejecting the plaintiff’s attempt “to
prove

scienter

knowledge

held

by
by

piecing
various

together
corporate

scraps

of

officials”);

‘innocent’
Sci.

Apps.

Int’l, 626 F.3d at 1274 (holding that “collective knowledge” is
an “inappropriate basis for proof of scienter” in a False Claims
Act

case).

Instead,

the

Government

must

prove

an

entity’s

scienter by demonstrating that a particular employee or officer
acted knowingly.

See id.

That employee or officer need not be

the same individual who submits the false claims.
Harrison

II,

352

F.3d

at

919

(rejecting

a

See, e.g.,

“single

actor”

theory); United States v. Ed. Mgt. Corp., 871 F.Supp.2d 433,
452-43 (W.D.Pa. 2012) (same).
Here, the Government apparently seeks to pool together the
collective knowledge of CVC’s employees (including, for example,
Dr. Fadul, Ms. Price, Ms. Hales, and others in CVC’s billing
department) to establish that CVC acted with actual knowledge or
reckless disregard.

(See ECF No. 31-1, at 31-32).

Because the

Fourth Circuit has rejected this type of “collective knowledge”
approach, whether CVC as an entity acted with the requisite
24

scienter

turns

scienter,

as

on
he

whether
is

the

Dr.
only

Fadul

possessed

individual

who

the
the

requisite
Government

contends acted knowingly.11
The Government attempts to establish that Dr. Fadul acted
knowingly in two different ways.

First, the Government contends

that Dr. Fadul had actual knowledge of the falsity of CVC’s
claims based on:

(1) his review of BCBS’s denials of CVC’s

claims for CPT 76770 and CPT 93965 and (2) his conversations
with CVC staffers about the propriety of billing for these two
codes in combination with others.

(ECF No. 31-1, at 33-34).

Although a reasonable fact finder could conclude that these
communications provided Dr. Fadul with actual knowledge of the
falsity of CVC’s claims (or gave him reason to question the
truth

of

reliance

CVC’s
on

claims),

these

events

the

problem

with

is

largely

one

the
of

Government’s
timing.

The

Government seeks to recover for claims submitted by CVC during
the entire period from 2004 until 2009, yet the events that
allegedly gave rise to Dr. Fadul’s actual knowledge occurred
much later than 2004.

For example, the earliest denial letters

from BCBS are dated July 2008 (for CPT 76770) and October 2008
(for

CPT

93965).

Likewise,

although

11

the

Government

vaguely

In the second amended complaint, the Government alleges
that Ms. Price also acted knowingly, but does not raise this
argument in its motion.
25

asserts that the relevant conversations between Dr. Fadul and
his staff occurred “[o]n more than one occasion over the years
from 2004 to 2009,” the record shows that the earliest of these
conversations actually occurred well after 2004.
34).

(ECF No. 31-1,

As described above, the earliest conversation about CVC’s

billing

of

abdominal

ultrasounds

that

directly

involved

Dr.

Fadul occurred at some point in 2007, when Ms. Haynie approached
him about her conversations with BCBS.12
involving

Dr.

Fadul

regarding

billing

The only conversation
for

duplex

ultrasound

tests occurred in July 2009 (when Dr. Fadul asked Ms. Mathews
her opinion about billing for CPT 93975 with CPT 93970/93971).
Additionally, although the Government refers to Dr. Fadul
as the “driving force” of CVC’s improper billing practices and
insinuates that Dr. Fadul had an active role in configuring the
Medical Mastermind software to bill automatically for CPT 76770
and CPT 93965, the record is devoid of any testimony from CVC
employees

corroborating

these

assertions.

Indeed,

all

that

supports the Government’s characterization of Dr. Fadul’s role
are Dr. Fadul’s admissions in his answer that he “caused CVC to

12

Certain testimony indicates that Dr. Fadul participated
in similar conversations at an earlier date, but – like the
Government’s brief – this testimony is exceedingly vague
regarding timing.
Ms. Hales, for example, avers that her
predecessor approached Dr. Fadul about billing for both CPT
76700 and CPT 76770 “even before BCBS told us not to do this,”
but it is not clear when this conversation occurred.
(ECF No.
31-4, Hales Aff. ¶ 14).
26

establish systems by which CVC would automatically render bills
for

both

CPT

76700

and

for

76770

when

only

the

abdominal

ultrasound was ordered and performed” and “caused CVC to bill
and collect from Medicare and Medicaid $166,858.55 for services
not rendered” as a result of this billing practice.
¶ 14).

(ECF No. 14

Yet at the same time, Dr. Fadul denied all of the

Government’s

remaining

allegations

of

fraud

and

then

later

provided interrogatory answers in which he disclaimed any active
role in CVC’s billing practices.
Notwithstanding
reasonable

jury

these

could

evidentiary

conclude

that

Dr.

deficiencies,
Fadul

had

a

actual

knowledge of the falsity of CVC’s claims for the entire period
from 2004 to 2009.

Yet to do so would require making a number

of inferences based on circumstantial evidence.

Accordingly, it

cannot be said, as a matter of law, that Dr. Fadul possessed
actual knowledge throughout the period in question.
The Government alternatively contends that, at a minimum,
Dr. Fadul demonstrated reckless disregard as to the truth or
falsity of CVC’s bills by failing to take reasonable steps to
ensure the bills’ accuracy.

(ECF No. 31-1, at 34-35).13

Courts

have construed the reckless disregard standard under the False

13

The Government does not expressly argue that Dr. Fadul
acted with deliberate ignorance, the intermediate standard for
establishing scienter under the False Claims Act.
27

Claims

Act

as

United

States

“an
v.

extreme

Krizek,

version

111

F.3d

of

ordinary

934,

942

negligence.”

(D.C.Cir.

1997)

(observing that, although the statute “was not intended to apply
to mere negligence, it is intended to apply in situations that
could be considered gross negligence where the submitted claims
to the Government are prepared in such a sloppy or unsupervised
fashion

that

resulted

in

overcharges

(internal quotation marks omitted).

to

the

Government”)

In Krizek, the D.C. Circuit

affirmed the trial court’s conclusion that a physician displayed
reckless

disregard

by

“fail[ing]

utterly”

to

review

bills

submitted on his behalf to Medicare where “even the shoddiest
recordkeeping

would

have

revealed”

that

the

claims

sought

reimbursement for an excessive number of patient care hours – in
some cases, in excess of 24 hours for a single day.

Id.

Similarly, in United States v. Stevens, 605 F.Supp.2d 863,
867 (W.D.Ky. 2008), the court considered whether a physician
displayed

reckless

disregard

as

claims submitted on his behalf.

to

the

truth

or

falsity

of

There, the defendant physician

used a new machine to provide a test that did not correspond to
any current CPT code.

Initially, the physician’s requests for

reimbursement for these tests were rejected by his patients’
insurance companies.
all

billing

The physician then “completely delegated”

responsibilities

to

someone

with

“absolutely

no

prior experience with medical billing,” after which the insurers
28

began remitting payment.

Id. at 869.

The physician admitted

that he took no steps to ensure that his bills were accurate and
never asked what codes were being billed, but instead “simply
assumed the claims were correct because they were being paid.”
Id.

Thus,

the

court

concluded

that

the

physician

displayed

“reckless disregard” by ignoring his duty as a Medicare and
Medicaid provider to “take reasonable steps to ensure that his
clinic’s claims for reimbursement [were] accurate.”
Although

seemingly

apposite,

Stevens

and

Id.

Krizek

do

not

require entry of summary judgment in favor of the Government
here.

First, in Krizek, the district court reached its finding

regarding

scienter

after

a

three-week

bench

trial

where

the

evidence showed an “utter failure” by the defendant physician to
review

the

false

claims

at

issue.

Here,

by

contrast,

the

Government seeks to establish scienter at the summary judgment
stage.

Typically,

defendant’s

intent

however,
or

“when

scienter,

plaintiff is inappropriate.”

the

issue

summary

turns

judgment

on

the

for

the

United States v. Taber Extrusions,

LP, 341 F.3d 843, 845-46 (8th Cir. 2003) (reversing district
court’s entry of summary judgment in favor of Government in a
False Claims Act case because although the Government “certainly
has

evidence

creating

the

requisite

inference”

to

scienter, the defendant “presented contrary evidence”).

29

support

Although Stevens was decided at the summary judgment stage,
it was undisputed there that the physician “took no other steps
whatsoever” to fulfill his duty to ensure the accuracy of his
bills; indeed, there was “not a shred of evidence to suggest
that [the physician] did anything to make sure his billings were
correct.”

Stevens, 605 F.Supp.2d at 869.

undisputed

evidence,

arguments

that

the

“he

had

court
a

In light of this

rejected

good

the

faith

belief

reimbursement requests were properly submitted.”

physician’s
that

his

Id. at 867.

Here, the record contains evidence (albeit thin) that Dr.
Fadul did take certain steps in connection with CVC’s billing
activities.

For example, Dr. Fadul represents that, although he

delegated responsibility for billing to Ms. Hales and Ms. Price,
he was “assured that we were in compliance” with applicable
rules and regulations based on Ms. Price’s connections and her
consultations with legal advisors.

(ECF No. 31-3, at 9).

Dr.

Fadul also represents that he instructed Ms. Ayres to purchase
the new CPT manuals each year so that CVC’s billing staffers
could review for new changes and ensure CVC’s compliance with
the

manuals.

(ECF

No.

31-30,

at

4).

Finally,

Dr.

Fadul

represents that he based his belief that CVC was in compliance
with

applicable

software

rules

updates

and

provided

regulations
by

Medical

apparently included updates to CPT codes.
30

based

on

the

Mastermind,

(Id.).

regular
which

A jury may ultimately find that Dr. Fadul’s actions are not
the type of “reasonable steps” that fulfilled his duty, as the
sole owner and operator of a Medicare and Medicaid provider, to
ensure the accuracy of CVC’s reimbursement requests.

Indeed,

the Government’s evidence that Dr. Fadul specifically instructed
CVC

staffers

to

continue

the

billing

practices

even

after

receiving information that it was improper to do so strongly
suggests that Dr. Fadul’s actions cannot be construed as such.
Yet

given

the

discrepancies

in

the

record

as

to

extent

and

timing of Dr. Fadul’s role in CVC’s billing practices and the
general preference for allowing the issue of scienter to be
decided by a fact finder, it is not appropriate to reach such a
conclusion without the aid of a jury.

See, e.g., United States

ex rel. Schaefer v. Conti Med. Concepts, Inc., No. 3:04–CV–400,
2009 WL 5104149, at *6 (W.D.Ky. Dec. 17, 2009) (although the
evidence of the healthcare provider’s scienter “strongly favors
the government and may likely aid in getting a jury verdict
. . . it does not warrant summary judgment”).
Because genuine issues of material fact remain as to the
necessary
summary

element

judgment

of

scienter,

must

counts against CVC.

the

be

as

denied

Government’s
to

its

False

motion

for

Claims

Act

The same conclusion likewise bars summary

judgment on the Government’s statutory claims against Dr. Fadul
in his individual capacity.
31

IV.

Common Law Claims
The Government alternatively contends that, “[i]n the event

that the Court might determine that summary judgment on the
False Claims Act claims is not appropriate,” it is entitled to
summary judgment on its common law claims for unjust enrichment
and payment under mistake of fact.
A.
A

(ECF No. 31-1, at 36).

Payment By Mistake of Fact
claim

for

payment

by

mistake

of

fact

allows

the

Government to “‘recover funds which its agents have wrongfully,
erroneously, or illegally paid.’”
Co.,

285

States

v.

F.Supp.2d
Wurts,

742,

303

776

U.S.

United States v. Medica-Rents

(N.D.Tex.

414,

415

2003)

(1938)).

(quoting
The

United

claim

is

“available to the United States and is independent of statute.”
United States v. Mead, 426 F.2d 118, 124 (9th Cir. 1970); see
also United States v. Lahey Clinic Hosp., Inc., 399 F.3d 1, 16
n. 16 (1st Cir. 2005) (explaining that the Government’s “power to
collect money wrongfully paid” is part of the United States’
“inherent authority”) (internal quotation marks omitted).

Where

it seeks to recover payments made as a result of false claims,
the Government must show that it “made . . . payments under an
erroneous belief which was material to the decision to pay.”
Mead, 426 F.2d at 124 (citing Wurts, 303 U.S. at 414).
Notably, “[k]nowledge of falsity is not a requisite for
recovery under the mistake doctrine.”
32

Mead, 426 F.2d at 125 n.

6.14

Thus, even where it cannot establish that a defendant acted

knowingly for purposes of the False Claims Act, the Government
may be entitled to recovery under the alternative theory of
payment

by

mistake

fact.

failed

Government

of

See,

to

establish

e.g.,

that

id.

the

(although

defendant

the

acted

knowingly in submitting false claims that “overstated his actual
charges,”

it

was

still

entitled

to

reimbursement

of

the

overcharges pursuant to its claim for payment by mistake of
fact);

cf.

2461031,

at

United
*5

States

(E.D.Mich.

v.

Khan,

Aug.

5,

No.

03cv74300,

2009)

(entering

2009

WL

summary

judgment on the Government’s payment by mistake claim as an
alternative holding in the event that amounts awarded under the
False

Claims

Act

were

“subsequently

be

found

to

be

legally

unsustainable”); United States v. Bellecci, No. 05cv1537, 2008
WL 802367, at *4-5 (E.D.Cal. Mar. 26, 2008) (observing that the
Government could be entitled to summary judgment on its claim

14

The Ninth Circuit decided Mead before Congress amended
the statutory language of the False Claims Act to make clear
that proof of a specific intent to deceive is not needed to
establish scienter.
See United States ex rel. McCoy v. Calif.
Med. Review, Inc., 723 F.Supp. 1363, 1370 (N.D.Cal. 1989)
(explaining that the 1986 amendments to the False Claims Act
superseded the holding of Mead that proof of specific intent to
defraud is required).
Although it is now easier to prove
scienter
under
the
False
Claims
Act,
Mead
nonetheless
establishes that when the Government is unable to make such a
showing (even under the lower standards of deliberate ignorance
or reckless disregard), the doctrine of payment by mistake of
fact may still be available as an alternative basis of recovery.
33

for payment by mistake of fact even where it had implicitly
“retract[ed]”

its

allegations

that

the

defendant

was

intentionally deceptive in submitting claims to the Government).
Here, it is undisputed that, during the period from 2004 to
2009, Medicare and Medicaid reimbursed CVC for CPT 76770 on
2,292 occasions and for CPT 93965 on 11,446 occasions.

It is

also

these

undisputed

that

Medicare

and

Medicaid

issued

reimbursements based on a belief that CVC had requested payment
only for services it had actually rendered.
offers

ample

erroneous

evidence

because

CVC

to

demonstrate

regularly

tests that it never performed.

that

requested

The Government
this

belief

was

reimbursement

for

It is also clear that this

belief was material to Medicare’s and Medicaid’s decision to pay
– in other words, the Programs would not have remitted payment
but for their reliance on the accuracy of CVC’s bills.

Thus,

because there is no dispute that the Government would not have
reimbursed CVC for CPT 76770 or CPT 93965 had the Government
known that CVC never performed the tests described by these
codes,

the

Government

is

entitled

to

recover

the

amounts

mistakenly paid to CVC.
The question remains as to whether Dr. Fadul is jointly
liable for such amounts in his individual capacity.
court

recognized

that

the

Government

is

entitled

The Mead
to

obtain

repayment from anyone “into whose hands the mistaken payments
34

flowed,” including third parties who did not directly receive
the mistaken payments but nonetheless participated somehow in
the transaction and “received benefits as a result” thereof.
Mead, 426 F.2d at 124-25; see also LTV Educ. Sys. Inc. v. Bell,
862

F.2d

1168,

1175

(5th

Cir.

1989)

(“[T]he

government

is

entitled to obtain repayment from a third party into whose hands
the mistaken payments flowed where that party participated in
and benefitted from the tainted transaction.”).

At least one

court has held that an officer of a healthcare corporation was
individually liable under a payment by mistake of fact theory
where he (1) signed the false certifications submitted by the
entity

to

Medicare

that

caused

the

mistaken

payments

and

(2) received tangible benefits from the payments in the form of
his corporate salary.

United States ex rel. Roberts v. Aging

Care Home Health, Inc., No. 02-2199, 2008 WL 2945946, at *7
(W.D.La. July 25, 2008).
Here, for the reasons discussed above, the record contains
discrepancies regarding the nature and extent of Dr. Fadul’s
participation in CVC’s submission of false claims.
unlike

in

Aging

Care,

the

Government

presents

Moreover,
no

evidence

regarding what benefits Dr. Fadul personally derived from the
mistaken payments.

It is not enough to assume that Dr. Fadul

received a personal benefit because he is the only member and
officer of CVC.

The wrongfully paid reimbursements may have
35

been used for other purposes (e.g., paying the salaries and
commissions

of

technicians

and

expenses).

CVC

employees;

radiologists;

Moreover,

the

compensating
and

any

Government

the

number
does

not

third-party
of

operating

advance

any

arguments that would justify piercing the corporate veil based
on the theory that CVC functioned merely as Dr. Fadul’s alter
ego.

See, e.g., Baltimore Line Handling Co. v. Brophy, 771

F.Supp.2d 531, 552 (D.Md. 2011) (observing that, in Maryland,
“the fiction of the wholly separate corporate form is jealously
guarded” and that a “herculean” effort is required to pierce the
corporate veil).

Thus, the Government fails to establish that

Dr. Fadul should be held liable in his personal capacity for the
mistaken payments remitted to CVC.
As to damages, the Government is entitled to recover from
CVC all amounts that Medicare and Medicaid mistakenly paid.15

15

By contrast, if the Government had established that CVC
violated the False Claims Act, CVC would be liable for treble
damages (i.e., three times the amount paid by Medicare and
Medicaid as a result of the false claims) as well as a civil
penalty of “no[t] less than $5,500 and no more than $11,000” for
“each false claim.”
United States ex rel. Bunk v. Birkart
Globistics GmbH & Co., Nos. 02cv1168 AJT, 07cv1198 AJT, 2012 WL
488256, at *4 (E.D.Va. Feb. 14, 2012) (citing Harrison I, 176
F.3d at 786) (emphasis added).
Here, the Government maintains
that CVC submitted 13,738 false claims to Medicare and Medicaid,
and seeks the maximum penalty of $11,000 for each claim. It is
questionable whether this request – which, by the court’s
calculation, would amount to a civil penalty of $151,118,000.00
– could withstand constitutional scrutiny.
See id. (holding
that a mandatory civil penalty under the False Claims Act of at
36

The Government presents two arguments regarding damages.

First,

the Government argues that its actual damages for the period
from 2004 to 2009 total $814,315.70.
falsity

of

each

of

the

claims

This figure assumes the

submitted

by

CVC

during

this

period that sought reimbursement either for the combination of
CPT

76700

and

CPT

76770

93970/93971 and 93965.

or

for

the

combination

(ECF No. 31-1, at 43).

of

CPT

The Government

argues that this assumption is reasonable because, based on the
results of its audit, “[t]here is no reason to believe that the
record” would justify “any other instance where CVC billed CPT
76770 or 93965.”
The

(Id. at 45).

Government

alternatively

offers

damages

calculations

based on a “statistical sampling and extrapolation” approach.
(Id. at 46-49).

Recognizing that it was unable to obtain the

medical records associated with 152 of the 551 claims in its
statistically

valid

random

samples,

the

Government

retained

several statisticians to extrapolate two different overpayment
scenarios.

Under the first scenario, the statistician assumed

that all of the claims lacking medical records were false.

In

other words, the first scenario assumed that all of the 551
claims

in

the

statistically

valid

random

samples

lacked

least $50,248,000 “constitutes an unconstitutionally excessive
fine in violation of the Eighth Amendment”).
Given the
conclusions set forth above, however, is not necessary to
address this issue.
37

justification for billing CPT 76770 or CPT 93965.
45,

Kozarev

formulas,
scenario

Aff.

the
to

¶ 11).

After

statistician
equal

applying

projected

$682,947.74.

standard

overpayment

(Id.).

(ECF No. 31-

Under

sampling

under
the

this
second

scenario, the statistician assumed that the medical records for
the 152 missing claims included justification for billing CPT
76770 or CPT 93965, resulting in a projected overpayment of
$415,687.01.
Based

(Id. ¶ 12).

on

a

thorough

review

of

the

Government’s

damages

evidence, the extrapolated total of $682,947.74 represents the
soundest measure of damages.16

Courts have routinely endorsed

sampling and extrapolation as a viable method of proving damages
in cases involving Medicare and Medicaid overpayments where a
claim-by-claim

review

is

not

practical.

See,

e.g.,

Ill.

Physicians Union v. Miller, 675 F.2d 151, 155 (7th Cir. 1982)
(where a claim-by-claim review is a practical impossibility, it
is reasonable to use statistical samples to audit claims to
arrive

at

a

rebuttable

initial

16

decision

regarding

damages);

Although the higher figure of $814,315.70 is arguably
justified, there is some evidence in the record that precludes a
blanket assumption that every single claim submitted by CVC
during the relevant period was false.
For example, the former
CVC technicians aver that it was rare for a physician to order
both an abdominal ultrasound and a retroperitoneal ultrasound
for the same patient but stop short of testifying that they
never performed both tests.
Thus, it is preferable to use the
extrapolated damages figure that makes some allowance for
sampling errors.
38

Yorktown Med. Lab., Inc. v. Perales, 948 F.2d 84, 89-90 n. 7 (2d
Cir. 1991) (use of statistical sampling and extrapolation to
calculate overcharges does not violate a defendant’s due process
rights

“[g]iven

the

low

risk

of

error

and

the

interest in minimizing administrative burdens”).
cases,

the

Government

provides

detailed

government

As in those

descriptions

of

its

audit, sampling, and extrapolation methods, including numerous
affidavits
fails

and

to

raise

supporting
any

documentation.

challenge

to

the

CVC,
methods

by

contrast,

used

by

the

Government, despite having ample time and opportunity to do so.
Thus, judgment will be entered against CVC and in favor of the
Government in the amount of $682,947.74.
B.

Unjust Enrichment

In light of the conclusions above, there is no need to
address the Government’s common law claim for unjust enrichment,
which is duplicative of its claim for payment by mistake of fact
and

seeks

the

same

relief.

See,

e.g.,

United

States

v.

Albinson, No. 09–1791, 2010 WL 3258266, at *18 (D.N.J. Aug. 16,
2010) (“Payment under mistake of fact and unjust enrichment are
essentially

duplicative

and

seek

the

same

relief.”);

United

States ex rel. Miller v. Bill Harbert Int’l Const., Inc., 505
F.Supp.2d 20, 23-24 (D.D.C. 2007) (same).

39

V.

Conclusion
For the foregoing reasons, the motion for summary judgment

filed by the Government will be granted in part and denied in
part.17

A separate Order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

17

Because many of the claims asserted by the Government in
its first amended complaint remain, it would be premature at
this stage to rule on the Government’s request for pre-judgment
interest.
40