UNITED STATES OF AMERICA et al v. BAHAL et al
Filing
31
OPINION FILED. Signed by Judge Noel L. Hillman on 12/22/15. (js)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ELIZABETH FLANAGAN, et al.,
Relator/Plaintiffs,
v.
DR. VISHAL BAHAL, D.O.,
et al.,
Defendants.
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Civ. No. 12-2216 (NLH/JS)
OPINION
APPEARANCES:
James M. Ficaro
Ross M. Wolfe
The Weiser Law Firm, P.C.
22 Cassatt Avenue, First Floor
Berwyn, Pa 19312
Counsel for Relator/Plaintiff
John R. Mininno
The Mininno Law Offices
475 White Horse Pike
Collingswood, NJ 08107
Counsel for Relator/Plaintiff
Charles Scott Graybow
Office off The U.S. Attorney
District Of New Jersey
970 Broad Street, Suite 700
Newark, NJ 07102
Counsel for the United States of America
Nicholas C. Harbist
Melissa Fundora Murphy
Blank Rome, LLP
301 Carnegie Center, 3rd Floor
Princeton, NJ 08540
Counsel for Defendants Dr. Vishal Bahal, D.O. and Advanced
Cardiology of South Jersey
1
HILLMAN, District Judge:
This matter involves a qui tam claim under the False Claims
Act (“FCA”), 31 U.S.C. § 3729 et seq., arising out of allegedly
fraudulent claims for Medicare funds.1
Before the Court is a
motion to dismiss Relator’s Amended Complaint pursuant to Fed.
R. Civ. P. 12(b)(6) filed by Defendants Dr. Vishal Bahal, D.O.
and Advanced Cardiology of South Jersey (“Defendants”).
The
Court has considered the parties’ submissions, and for the
reasons that follow, Defendants’ motion will be granted in part
and denied in part.
I.
BACKGROUND
A.
Factual Background
Plaintiff Elizabeth Flanagan (the “Realtor”) brings this
qui tam action pursuant to the False Claims Act, 31 U.S.C. §
3729 et seq. and the False Claims Act of the State of New
Jersey, N.J.S.A. 2A:32C-1 et seq. for the alleged submission of
1
The Federal False Claims Act prohibits the submission of
false or fraudulent claims for payment to the United States and
authorizes qui tam actions, by which private individuals may
bring a lawsuit on behalf of the Government in exchange for the
right to retain a portion of any resulting damages award.
Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401, 131
S. Ct. 1885, 1889, 179 L. Ed. 2d 825 (2011); U.S. ex rel.
Wilkins v. United Health Group, Inc., 659 F.3d 295, 298 n.1 (3d
Cir. 2011).
2
false or fraudulent Medicare claims.
Relator was employed as a medical assistant and
receptionist in Defendants’ medical office in Mullica Hill, New
Jersey from June 2010 to May 2012.
Am. Compl. ¶ 9.
As part of
her job, Relator administered Defendants’ electronic and paper
patient charts.
Am. Compl. ¶ 11.
Relator’s allegations are
based on her direct knowledge and upon information and belief.
Am. Compl. ¶ 13.
Specifically, Relator alleges Defendants
engaged in eight different illegal schemes: (1) changing the
dates of service on claims in order to increase reimbursements;
(2) providing medically unnecessary services; (3) failing to
have Dr. Bahal review patient test results; (4) failing to
provide the required level of supervision for ANSAR tests; (5)
failing to have Dr. Bahal review and interpret Holter monitor
data; (6) providing kickbacks to patients in violation of the
Anti-Kickback Statute, 42 U.S.C. § 1320a-7b; (7) conducting
medically unnecessary lower extremity studies; and (8) waiving
patients’ copayment amounts.
The Amended Complaint invokes two subsections of the FCA
and its state counterpart.
Section 3729(a)(1)(A) applies to
those who “knowingly presented, or caused to be presented a
false or fraudulent claim for payment or approval.”
3
A prima
facie pleading requires: “(1) the defendant presented or caused
to be presented to an agent of the United States a claim for
payment; (2) the claim was false or fraudulent; and (3) the
defendant knew the claim was false or fraudulent.
U.S. ex rel.
Wilkins v. United Health Grp., Inc., 659 F.3d 295, 305 (3d Cir.
2011) (citation omitted).
Section 3729(a)(1)(B) applies to
those who “made, used, or caused to be made or used, a false
record or statement material to a false or fraudulent claim.”
For this section, a Relator must plead that the defendant: “(1)
made, used, or caused to be made or used, a false record or
statement; (2) the defendant knew the statement to be false; and
(3) the statement was material to a false or fraudulent claim.
U.S. ex rel. Zwirn v. ADT Sec. Servs., Inc., No. 10-2639, 2014
WL 2932846, at *5 (D.N.J. June 30, 2014).
Relator filed this complaint under seal on April 11, 2012.
The seal was extended until February 13, 2015, when the
Government entered its Notice of Election to Decline to
Intervene.
Relator filed her Amended Complaint on April 27,
2015.
II.
JURISDICTION
This Court has jurisdiction over Relator’s federal claims
under 28 U.S.C. § 1331, and may exercise supplemental
4
jurisdiction over Relator’s related state law claim under 28
U.S.C. § 1367.
III. STANDARDS OF LAW
A.
Motion to Dismiss
When considering a motion to dismiss a complaint for
failure to state a claim upon which relief can be granted
pursuant to Rule 12(b)(6), a court must accept all allegations
in the complaint as true and view them in the light most
favorable to the plaintiff.
347, 350 (3d Cir. 2005).
See Evancho v. Fisher, 423 F.3d
A complaint must contain “a short and
plain statement of the claim showing that the pleader is
entitled to relief.”
Fed. R. Civ. P. 8(a)(2).
A district court, in weighing a motion to dismiss, asks
“‘not whether a plaintiff will ultimately prevail but whether
the claimant is entitled to offer evidence to support the
claims[.]’”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 563 n.8
(2007) (quoting Scheuer v. Rhoades, 416 U.S. 232, 236 (1974));
see also Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1953
(2009) (“Our decision in Twombly expounded the pleading standard
for ‘all civil actions[.]’”) (citation omitted).
The Third
Circuit has instructed district courts to conduct a two-part
analysis in deciding a motion to dismiss.
5
Fowler v. UPMC
Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).
First, a district court “must accept all of the complaint’s
well-pleaded facts as true, but may disregard any legal
conclusions.”
Fowler, 578 F.3d at 210-11 (citing Iqbal, 129 S.
Ct. at 1949).
Second, a district court must “determine whether
the facts alleged in the complaint are sufficient to show that
the plaintiff has a ‘plausible claim for relief.’”
(quoting Iqbal, 129 S. Ct. at 1950).
Id. at 211
“[A] complaint must do
more than allege the plaintiff’s entitlement to relief.”
Id.
“‘[W]here the well-pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the
complaint has alleged – but it has not ‘show[n]’ - ‘that the
pleader is entitled to relief.’’”
Id. (quoting Iqbal, 129 S.
Ct. at 1949); see also Phillips v. County of Allegheny, 515 F.3d
224, 234 (3d Cir. 2008) (“The Supreme Court’s Twombly
formulation of the pleading standard can be summed up thus:
‘stating . . . a claim requires a complaint with enough factual
matter (taken as true) to suggest’ the required element.
This
‘does not impose a probability requirement at the pleading
stage,’ but instead ‘simply calls for enough facts to raise a
reasonable expectation that discovery will reveal evidence of’
the necessary element.”)(quoting Twombly, 550 U.S. at 556).
6
A court need not credit “‘bald assertions’” or “‘legal
conclusions’” in a complaint when deciding a motion to dismiss.
In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429–
30 (3d Cir. 1997).
The defendant has the burden of
demonstrating that no claim has been presented.
Hedges v.
United States, 404 F.3d 744, 750 (3d Cir. 2005) (citing Kehr
Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1409 (3d Cir.
1991)).
B.
Rule 9(b)
The Third Circuit has held that “plaintiffs must plead FCA
claims with particularity in accordance with Rule 9(b).”
U.S.
ex rel. Wilkins v. United Health Group, Inc., 659 F.3d 295, 301
n.9 (3d Cir. 2011) (citing U.S. ex rel. LaCorte v. SmithKline
Beecham Clinical Labs., 149 F.3d 227, 234 (3d Cir. 1998)).
Fed. R. Civ. P. 9(b) states, “[i]n alleging fraud or mistake, a
party must state with particularity the circumstances
constituting fraud or mistake.
Malice, intent, knowledge, and
other conditions of a person’s mind may be alleged generally.”
See Craftmatic Securities Litigation v. Kraftsow, 890 F.2d 628,
645 (3d Cir. 1989) (“Fed. R. Civ. P. 9(b) requires plaintiffs to
plead the circumstances of the alleged fraud with particularity
to ensure that defendants are placed on notice of the ‘precise
7
misconduct with which they are charged, and to safeguard
defendants against spurious charges’ of fraud.”).
The Third Circuit made clear, however, that at the pleading
stage, Rule 9(b)’s particularity requirement does not require a
plaintiff to identify a specific claim for payment to state a
claim for relief.
Wilkins, 659 F.3d at 308.
Rather, the Third
Circuit suggested that a plaintiff should “identify
representative examples of specific false claims that a
defendant made to the Government in order to plead an FCA claim
properly.”
Id. (remanding the issue to the District Court).
Courts in this District have found that a plaintiff may satisfy
that requirement in one of two ways: (1) “by pleading the date,
place or time of the fraud;” or (2) using an “alternative means
of injecting precision and some measure of substantiation into
their allegations of fraud.”
U.S. ex rel. Wilkins v. United
Health Group, Inc., No. 08–3425, 2011 WL 6719139, at *2 (D.N.J.
Dec. 20, 2011) (on remand from the Third Circuit) (citing Lum v.
Bank of Am., 361 F.3d 217, 223–24 (3d Cir. 2004)).
In Foglia v. Renal Ventures Management, LLC, 754 F.3d 153,
155–56 (3d Cir. 2014), the Third Circuit explained that the
“Fourth, Sixth, Eighth, and Eleventh Circuits have held that a
plaintiff must show ‘representative samples’ of the alleged
8
fraudulent conduct, specifying the time, place, and content of
the acts and the identity of the actors,” while the “First,
Fifth, and Ninth Circuits, however, have taken a more nuanced
reading of the heightened pleading requirements of Rule 9(b),
holding that it is sufficient for a plaintiff to allege
particular details of a scheme to submit false claims paired
with reliable indicia that lead to a strong inference that
claims were actually submitted.”
Foglia, 754 F.3d at 155–56
(citations and quotations omitted).
Considering that “the
purpose of Rule 9(b) is to provide defendants with fair notice
of the plaintiffs' claims,” the Third Circuit adopted “the more
‘nuanced’ approach followed by the First, Fifth, and Ninth
Circuits.”
Id. at 156–57 (citations and quotations omitted).
Thus, in order to survive a motion to dismiss and satisfy
the standards of Rule 9(b), a plaintiff asserting claims under
the FCA “must provide particular details of a scheme to submit
false claims paired with reliable indicia that lead to a strong
inference that claims were actually submitted.”
(citations omitted).
Id. at 158–59
“Describing a mere opportunity for fraud
will not suffice,” and, instead, a plaintiff must provide
“sufficient facts to establish a plausible ground for relief.”
Id. at 159 (citations omitted).
9
IV. DISCUSSION
As an initial matter, Defendants argue that Relator has
added four “entirely new” schemes to the Amended Complaint which
did not appear in the original complaint.
Defendants argue that
the Court should dismiss these new claims because Relator failed
to file the Amended Complaint under seal in accordance with 31
U.S.C. § 3730(b)(2).2
Defs.’ Reply at 2 [Doc. No. 30].
Relator
alleges for the first time in her Amended Complaint that Dr.
Bahal failed to provide the required level of supervision for
ANSAR testing (Am. Compl. ¶¶ 134-161), provided kickbacks to
patients in violation of the Anti-Kickback Statute (Am. Compl.
¶¶ 192-204), conducted medically unnecessary lower extremity
studies (Am. Compl. ¶¶ 171-191), and waived patients’ copay
amounts (Am. Compl. ¶¶ 236-248).
Relator, in turn, argues that
Defendants waived this potential procedural deficiency by
permitting Relator to file an Amended Complaint.
The question of whether an amended complaint must be filed
under seal in a qui tam FCA action has not been decided by our
2
This section provides, in relevant part, "[t]he complaint shall
be filed in camera, shall remain under seal for at least 60
days, and shall not be served on the defendant until the court
so orders." 31 U.S.C. § 3730(b)(2).
10
Circuit Court.3
Some courts require the filing and service
requirements for an original FCA complaint be duplicated when
the amended complaint adds new claims or different allegations
of fraud.
See, e.g., U.S. ex rel. Davis v. Prince, 766 F. Supp.
2d 679, 684 (E.D. Va. 2011); U.S. ex rel. Wilson v. BristolMyers Squibb, Inc., 750 F.3d 111, 115 (1st Cir. 2014).
Other
courts find that the procedural requirements only apply to the
filing of original complaints.
See, e.g., U.S. ex rel. Saldivar
v. Fresenius Med. Care Holdings, Inc., 972 F. Supp. 2d 1317,
1326 (N.D. Ga. 2013).
Preliminarily, the Court rejects Relator’s argument that
any procedural defects in the Amended Complaint were waived by
Defendants’ consent to the filing of the Amended Complaint.
Relator filed an Amended Complaint, as of right, pursuant to
Fed. R. Civ. P. 15(a)(1) without prejudice to Defendants’ right
to assert all applicable defenses.
However, the Court does not
find any procedural defects exist.
The Court’s February 13,
3
Defendants cite U.S. ex rel. Mailly v. Healthsouth Holdings,
Inc., No. 07-2981, 2010 WL 149830 (D.N.J. Jan. 15, 2010) to
support their proposition that even amended complaints must be
filed under seal in qui tam actions. In that case, however, not
even the original complaint was filed under seal. The Court
dismissed the complaint for failing to follow the FCA’s
procedural rules, but this ruling was based on the fact that
neither complaint was filed under seal.
11
2015 Order specifically stated that the seal was “lifted as to
all matters occurring in this action after the date of this
order.”
Feb. 13, 2015 Order ¶ 3 [Doc. No. 12].
Because the
Court’s Order states that all materials filed after February 13,
2015 are not to be sealed, and the Amended Complaint was filed
after that date on April 27, 2015, the Court need not decide
which line of cases to apply.
The Court will not dismiss
Relator’s new claims on these grounds.
Substantively, Defendants argue that one of Relator’s
claims fails to state a claim and the remainder do not survive
the heightened pleading requirement of Rule 9(b).
The Court
considers both of Defendants’ arguments in turn.
A. Failure to State a Claim: Changed Dates of Service
Relator alleges that Defendants scheduled procedures for
patients on separate dates or fraudulently altered documents to
make it appear that procedures were performed on different dates
in order to increase Medicare reimbursements.
205-35.
Am. Compl. ¶¶
Defendants argue this claim fails as a matter of law
because this conduct did not cause any loss to the Government
because whether the procedures were billed together or
separately did not result in a greater reimbursement.
See U.S.
ex rel. Sanders v. Am.-Amicable Life Ins. Co. of Texas, 545 F.3d
12
256, 259 (3d Cir. 2008) (the FCA only covers instances of fraud
that might result in financial loss to the Government).
Defendants point out that in Relator’s original complaint,
the basis for Relator’s “bundling” claim was the Centers for
Medicare & Medicaid Services (CMS)4 Multiple Procedure Payment
Reduction Policy (“MPPR”).
The MPPR Policy provides that CMS
will make full payment on the technical component of the highest
paid procedure on a single day, but other procedures performed
that same day on the same patient will be reimbursed at a lower
rate.
Relator alleged in her original complaint that in order
to circumvent the MPPR policy, Dr. Bahal instructed his staff to
schedule tests for different days so that they could be billed
separately, or falsify the dates on the records after the fact.
Orig. Compl. ¶¶ 34-73.
Defendants previously explained,
however, that the MPPR Policy did not apply to diagnostic
cardiovascular procedures until January 1, 2012 and Relator
filed her original complaint on April 13, 2012.
The Amended
Complaint does not reference the MPPR policy and Relator
provides no alternative factual or legal basis for her claim
that Defendants conduct of bundling procedures, if true, caused
4
CMS is a federal agency within the United States Department of
Health and Human Services (HHS) that administers the Medicare
program.
13
a loss to the Government.
Accordingly, this claim will be
dismissed without prejudice.
B. Plausibility under the Heightened Pleading Requirements
of Rule 9(b)
Defendants additionally argue that Relator’s remaining
seven alleged fraudulent schemes are insufficiently pled.
The
Court will analyze these seven schemes individually.
1. Medically Necessary Testing
First, Relator alleges “upon information and belief” that
Defendants “systemically and routinely submitted false claims
[and] certified that there was a medical necessity” when such
treatments were not medically necessary.
Am. Compl. ¶ 50.
Defendants argue that Relator has no medical expertise to make
these allegations and is not qualified to determine medical
necessity.
For example, Realtor states that Dr. Bahal ordered
multiple cardiology tests, but provides no basis as to why such
tests were medically unnecessary.
Further, Relator claims that
after Dr. Bahal met with patients their charts would include
additional patient reported symptoms which justified additional
testing.
However, Defendants argue that a physician is expected
to obtain more complete symptom information from a patient and
respond accordingly.
Defendants further attack Relator’s single
example of a patient who Dr. Bahal allegedly subjected to
14
catheterization solely because Medicare would reimburse the
procedure.
Defendants argue that Relator has provided no
support for the allegation that the catheterization was not
otherwise medically necessary.
The Court finds that this first scheme does not pass either
the Rule 8 or 9(b) pleading standards.
Because Relator provides
no basis as to why these tests were medically unnecessary based
on patient reported symptoms, these allegations are “not only
compatible with, but more likely explained by,” lawful behavior
and therefore cannot “plausibly suggest” actionable wrongdoing.
Iqbal, 129 S. Ct. at 1950.
Further, pursuant to Rule 9(b),
Relator has only provided “a mere opportunity for fraud” and has
failed to plead sufficient facts to establish a plausible ground
for relief.”
Foglia, 754 F.3d at 158 (citations omitted).
Accordingly, this claim will be dismissed without prejudice.
2. Dr. Bahal Failed to Read Cardiology Studies
Next, Relator alleges that Defendants submitted false
claims for reimbursements for various cardiology studies
performed by staff members but not reviewed by Dr. Bahal.
Relator alleges that it would have been “virtually impossible”
for Dr. Bahal to have reviewed the studies without Relator’s
knowledge because she was the first to arrive and last to leave
15
the medical office each day.
Am. Compl ¶ 101.
Relator alleges that Defendants submitted factually false
claims because the reports did not contain Dr. Bahal’s
interpretation, the Government paid for Dr. Bahal’s professional
interpretation which it did not receive, and Dr. Bahal never
submitted a report with his interpretation.
In the Amended
Complaint, Relator admits that reports were generated and signed
by Dr. Bahal, but claims they were reviewed in haste in
“bunches.”
Am. Compl. ¶ 80.
Relator further alleges Defendants
submitted a legally false claim for diagnostic tests because Dr.
Bahal did not (1) review or interpret the diagnostic tests and
(2) did not review or author the reports in violation of 42
C.F.R. § 415.102(a)(1)-(3).5
“There are two categories of false claims under the FCA: a
factually false claim and a legally false claim.”
U.S. ex rel.
Wilkins v. United Health Grp., Inc., 659 F.3d 295, 305 (3d Cir.
2011).
“A claim is factually false when the claimant
5
42 C.F.R. § 415.102(a)(1)-(3) provides: "(a) General rule. If
the physician furnishes services to beneficiaries in providers,
the carrier pays on a fee schedule basis provided the following
requirements are met: (1) The services are personally furnished
for an individual beneficiary by a physician. (2) The services
contribute directly to the diagnosis or treatment of an
individual beneficiary. (3) The services ordinarily require
performance by a physician.”
16
misrepresents what goods or services that it provided to the
Government and a claim is legally false when the claimant
knowingly falsely certifies that it has complied with a statute
or regulation the compliance with which is a condition for
Government payment.”
Id. (citation omitted).
Legally false claims are based on a false certification
theory of liability and may be express or implied.
Rodriquez v.
Our Lady of Lourdes Med. Ctr., 552 F.3d 297, 303 (3d Cir. 2008),
overruled in part on other grounds by United States ex rel.
Eisenstein v. City of New York, 556 U.S. 928 (2009).
“Under the
‘express false certification’ theory, an entity is liable if it
falsely certifies that it is in compliance with regulations
which are prerequisites to Government payment in connection with
the claim for payment of federal funds.”
U.S. ex rel. Wilkins
v. United Health Grp., Inc., 659 F.3d 295, 305 (3d Cir. 2011)
(citing Rodriguez, 552 F.3d at 303).
The implied false certification theory, in contrast, is
premised “on the notion that the act of submitting a claim for
reimbursement itself implies compliance with governing federal
rules that are a precondition to payment.”
omitted).
Id. at 305 (citation
“[U]nder this theory a plaintiff must show that if
the Government had been aware of the defendant’s violations of
17
the Medicare laws and regulations that are the bases of a
plaintiff’s FCA claims, it would not have paid the defendant’s
claims.”
Id. at 307.
Relator’s factually false certification theory claim may
proceed.
“In a run-of-the-mill ‘factually false’ case, proving
falsehood is relatively straightforward: A relator must
generally show that the Government payee has submitted ‘an
incorrect description of goods or services provided or a request
for reimbursement for goods or services never provided.’”
U.S.
ex rel. Conner v. Salina Reg'l Health Ctr., Inc., 543 F.3d 1211,
1217 (10th Cir. 2008) (citation omitted).
As an example,
Relator alleges Dr. Bahal’s Medicare submissions for ultrasounds
were factually false because the reports did not contain Dr.
Bahal’s interpretation as required by statute.
This constitutes
an incorrect description of goods and services alleged never to
have been provided and sufficiently states a claim for relief.
Relator further provides representative examples of specific
false claims.
See, e.g., Am. Compl. ¶¶ 93-94.
Because the
Court has found this case may proceed on the basis of factual
falsehood, it need not analyze the same claim under an
alternative theory.
3.
Wilkins, 659 F.3d at 313.
ANSAR (Autonomic Nervous System And Respiration) Tests
18
Relator alleges that Defendants submitted false claims in
connection with ANSAR tests because they were administrated in
violation of Medicare’s supervision requirements.
134-35.
Am. Compl. ¶¶
Specifically, Relator alleges that ANSAR tests either
required direct or personal supervision and were regularly
performed when Dr. Bahal was not present in violation of 42
C.F.R. § 410.32(b) (“all diagnostic x-ray and other diagnostic
tests covered under section 1861(s)(3) of the Act and payable
under the physician fee schedule must be furnished under the
appropriate level of supervision by a physician as defined in
section 1861(r) of the Act.
Services furnished without the
required level of supervision are not reasonable and
necessary”).
Relator asserts that she personally performed
ANSAR tests outside of Dr. Bahal’s presence.
Thus, Realtor
alleges that due to the lack of supervision, the ANSAR tests
submitted to Medicare constituted false claims.
Relator has
provided particular details of a scheme to submit false claims
paired with reliable indicia that lead to a strong inference
that claims were actually submitted.
Foglia, 754 F.3d at 158–
59.
Defendants argue that Relator has not specified whether or
not ANSAR tests were billed globally, in which case the
19
physician supervision concept may not have applied.
However,
Relator alleges that ANSAR testes were billed under two codes,
both of which required Dr. Bahal’s presence.
143.
Am. Compl. ¶¶ 142-
The Court need not decide a dispute of fact at this point.
Viewing the facts in the light most favorable to Relator,
Relator has sufficiently pled a FCA claim with regard to this
scheme.
4.
Holter Monitoring
Relator alleges that Defendants submitted false claims for
the professional components of holter monitoring services
including: (1) submitting claims for the review and
interpretation of holter monitor data that was not performed and
(2) submitting claims for Dr. Bahal’s review and interpretation
of holter monitor data performed by another staff member in
violation of 42 C.F.R. § 415.102(a)(1).
Specifically, Relator
alleges that bills were submitted before the patient returned
the holter monitor (Am. Comp. ¶ 165), claims would reflect that
Dr. Bahal interpreted data where the data had only been reviewed
and interpreted by an unqualified staff member (Am. Compl. ¶¶
168-169), and claims would be submitted for holter monitor data
that had not been reviewed by anyone (Am. Compl. ¶¶ 166-167).
The Amended Complaint lists forty patients for whom Dr. Bahal
20
failed to review and interpret their holter monitor data.
Compl. ¶ 167.
Am.
As such, Plaintiff has pled this claim with
sufficient particularity to satisfy Foglia.
5.
Kickbacks for Unnecessary Testing
Relator alleges that Dr. Bahal provided patients with
prescription narcotics in exchange for allowing him to perform
and bill Medicare for unnecessary tests.
Am. Compl. ¶¶ 192-204.
Specifically, Relator alleges that Dr. Bahal gave A.F.
prescriptions for narcotics after every visit which were not
medically necessary as an inducement to permit Dr. Bahal to bill
Medicare for unnecessary tests.
The Anti-Kickback Statute (AKS), in relevant part, provides
that
(2) whoever knowingly and willfully offers or pays
any remuneration (including any kickback, bribe or
rebate)
directly
or
indirectly,
overtly
or
covertly, in cash or in kind to any person to induce
such person—
(A) to refer an individual to a person for the
furnishing or arranging for the furnishing of
any time or service for which payment may be
made in whole or in part under a Federal health
care program, or
(B) to purchase, lease, order, or arrange for
or recommend purchasing, leasing, or ordering
any good, facility, service, or item for which
payment may be made in whole or in part under
a Federal health care program,
21
shall be guilty of a felony upon conviction
thereof, shall be fined not more than $25,000 or
imprisoned for not more than five years, or both.
Wilkins, 659 F.3d at 311 (citing 42 U.S.C. § 1320a–7b(b)(2)).
Relator’s AKS claim is not sufficiently factually
supported.
Rather, Relator alleges in a conclusory fashion that
the narcotics allegedly prescribed by Dr. Bahal were not
medically necessary.
Am. Compl. ¶ 195; see U.S. ex rel. Lampkin
v. Johnson & Johnson, Inc., No. 08-05362, 2013 WL 2404238, at *5
(D.N.J. May 31, 2013) (dismissing Relator’s kick-back claims
under Rule 9(b) where complaint provided no factual support that
medications were only prescribed in order to receive kickbacks).
Relator only specifically claims that one person, A.F., was
induced into medically unnecessary testing but does not explain
the basis of this conclusion.
For example, Relator does not
allege the equivalent of a patient who comes in for a broken
foot and receives an arm x-ray.
Rather, Relator claims to know
that A.F.’s tests were medically unnecessary, but provides no
factual support for this claim.
This claims does not pass the
heightened pleading requirement of 9(b) and therefore will be
dismissed without prejudice.
6.
Arterial and Lower Extremity Scans
Relator alleges that Defendants regularly submitted claims
22
for noninvasive physiologic studies of the lower extremities
that were not medically necessary.
Am. Compl. ¶¶ 171-91.
Specifically, Relator alleges that Dr. Bahal performed an
arterial scan and a lower extremity scan on patients during the
same visit, which was unusual and not medically necessary.
Compl. ¶¶ 172-73.
Am.
Relator claims that a duplex scan is only
warranted when the arterial scan is abnormal, that is, if there
is a 50 percent stenosis or significant symptoms present.
Am.
Compl. ¶ 173 (citing Local Coverage Determination: Non-Invasive
Cerebrovascular Arterial Studies (L27504) (“Physiologic studies
and a duplex scan performed on the same day will be considered
medically necessary if there is a 50 percent stenosis
demonstrated on the duplex scan, or there are significant
symptoms present.”)).
Relator alleges that Dr. Bahal regularly
ordered duplex scans regardless of the results of the first
study.
Am. Compl. ¶ 177.
Relator names eleven patients who had
both tests performed on the same day.
There are two main deficiencies in Relator’s allegations.
First, Relator does not allege that these patients did not have
a 50 percent stenosis and did not have significant symptoms
present.
Second, Relator provides no factual support for her
claim that these tests were not medically necessary.
23
Accordingly, this claim will be dismissed without prejudice as
it does not satisfy Foglia.
7.
Waiver of Co-Payments
Relator alleges that Defendants regularly waived copayments
which violates the FCA because: (1) Defendants misstated the
reasonable charge of the services provided; (2) Defendants’
waiver of copayments violates the AKS; and (3) Defendants’
waiver of copayments resulted in Defendants performing and
billing for procedures and services that were not reasonable or
necessary.
Am. Compl. ¶ 236.
Relator also claims the waiver of
copayments constitutes an AKS violation.
Am. Compl. ¶ 245.
Generally, Medicare covers 80 percent of the reasonable
cost of medical services. 42 U.S.C. § 1395l(a)(1).
Accordingly,
the patient is normally required to contribute the remaining 20
percent as a copayment.
The Medicare Claims Processing Manual
provides:
Physicians or suppliers who routinely waive the
collection of deductible or coinsurance from a
beneficiary constitute a violation of the law
pertaining to false claims and kickbacks....
Deductible and coinsurance amounts are taken
into account (included) in determining the
reasonable charge for a service or item. In this
regard, a billed amount that is not reasonably
related to an expectation of payment is not
considered the “actual” charge for the purpose
of processing a claim or for the purpose of
determining customary charges.
24
Medicare Claims Processing Manual, Ch. 23, § 80.8.1, available
at www.cms.hhs.gov/manuals/downloads/clm104c23.pdf.
As
explained by another court,
The “false claim” occurs, according to the
Department of Health and Human Services Office of
Inspector General (“OIG”), because a “provider,
practitioner, or supplier who routinely waives
Medicare copayments or deductibles is misstating
its actual charge.” Department of Health and Human
Services, Publication of OIG Special Fraud Alerts,
59 F.R.65372, 65374–65375 (Dec. 19, 1994). In
turn, the Medicare program pays more than it
should for a particular visit. See id. at 65375
(providing the following example of a false claim:
“If a supplier claims that its charge for a
service is $100, but routinely waives the copayment, the actual charge is $80. Medicare should
be paying 80% of $80 (or $64), rather than 80% of
$100 (or $80). As a result of the supplier's
misrepresentation, the Medicare program is paying
$16 more than it should for the service.”). The
OIG explained that one exception to “prohibition
against waiving copayments and deductibles is that
providers ... may forgive the copayment in
consideration of a particular patient's financial
hardship.” Id. However, this exception “should be
used occasionally to address the special financial
needs of a particular patient,” and “[e]xcept in
such special cases, a good faith effort to collect
deductibles and copayments must be made.” Id.
U.S. ex rel. Sharp v. E. Oklahoma Orthopedic Ctr., No. 05-572,
2009 WL 499375, at *23 (N.D. Okla. Feb. 27, 2009).
Relator has
sufficiently alleged the factual scenario described above.
Relator alleges Dr. Bahal routinely waived copayments which
25
resulted in Medicare paying more than it should have for patient
visits.
Relator further alleges that the waiving of copayments
was intended to induce patients to allow Dr. Bahal to perform
medically unnecessary tests and procedures.
248.
Am. Compl. ¶¶ 246,
Accordingly, Relator has stated a claim under the FCA for
waiver of copayments.
Likewise, Relator has stated a claim under the AKS.
The
AKS prohibits offering or paying any remuneration “to any person
to induce such person to purchase ... any good ... for which
payment may be made in whole or in part under a Federal health
care program.”
42 U.S.C. § 1320a–7b(b)(2)(B).
Relator alleges
that Dr. Bahal waived copayments as an inducement to generate
business payable to Medicare.
Accordingly, this claim is also
sufficiently pled.
C. State Claims
Defendants also argue that claims made under the New Jersey
Statutes (Counts III and IV) are deficient for the same reasons
as the claims made under the FCA.
Defs.’ Br. at 4 n.4.
Count
III asserts a violation of the New Jersey False Claims Act,
N.J.S.A. § 2A:32C-3(a) and Count IV alleges a violation of the
New Jersey False Claims Act pursuant to N.J.S.A. § 2A:32C-3(b).
Relator does not specify which alleged schemes she seek relief
26
under pursuant to the provisions of the New Jersey False Claims
Act.
Accordingly, to the extent the Court has found Relator has
failed to plead her FCA claims, those state claims are also
dismissed without prejudice.
V.
CONCLUSION
Defendants’ motion to dismiss will be granted in part and
denied in part.
Relator’s claim that Defendants changed dates
of service to increase Medicare reimbursements will be dismissed
without prejudice because it fails to state a claim.
Three of
Relator’s alleged schemes will be dismissed without prejudice on
the grounds that they are insufficiently pled: (1) Defendants
systemically and routinely submitted false claims for medically
unnecessary tests; (2) Defendants provided kickbacks for
unnecessary testing; and (3) Defendants provided duplicative
arterial and lower extremity scans.
The remaining four alleged
schemes are sufficiently pled and will not be dismissed.
To the
extent the Court has found Relator has failed to sufficiently
plead her FCA claims, those state claims are also dismissed
without prejudice.
An Order consistent with this Opinion will
be entered.
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
At Camden, New Jersey
Dated:
December 22, 2015
27
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