United States of America ex rel. et al v. Boyko et al

Filing 138

MEMORANDUM OPINION AND ORDER directing that the 116 Motion for Leave to File Response to Plaintiff's Memorandum in Opposition to Defendant, Martin Gottlieb & Associates, LLC's Motion to Dismiss Amended Complaint is GRANTED and that the [1 08] Motion to Dismiss Amended Complaint is GRANTED; the 110 Motion to Dismiss Amended Complaint is DENIED as to the claims, asserted in Counts One and Two, that Dr. Perni made, or caused to be made, false records and/or a false claim, as to the rec ords and billing associated with the Relator's August 2-3 emergency room visit, and GRANTED as to all other claims and all other Defendants. Signed by Judge Irene C. Berger on 1/31/2020. (cc: counsel of record; any unrepresented party) (kew)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
CHARLESTON DIVISION
UNITED STATES OF AMERICA,
ex rel. CORTNEY TAYLOR,
Plaintiff,
v.

CIVIL ACTION NO. 2:17-cv-04213

MICHAEL J. BOYKO, M.D., et al.,
Defendants.

MEMORANDUM OPINION AND ORDER
The Court has reviewed the Relator’s Amended Complaint for Violations of the False
Claims Act, 31 U.S.C. § 3729, et seq. (Document 101), Defendant Martin Gottlieb & Associates,
LLC’s Motion to Dismiss Amended Complaint (Document 108), Defendant Martin Gottlieb &
Associates, LLC’s Memorandum in Support of Its Motion to Dismiss Amended Complaint
(Document 109), the Relators’ Memorandum in Opposition to Defendant Martin Gottlieb &
Associates, LLC’s Motion to Dismiss Amended Complaint (Document 112), and the Response to
Plaintiff’s Memorandum in Opposition to Defendant, Martin Gottlieb & Associates, LLC’s Motion
to Dismiss Amended Complaint (Document 115), as well as all attachments. In addition, the Court
has reviewed Defendant Martin Gottlieb & Associates, LLC’s Motion for Leave to File Response
to Plaintiff’s Memorandum in Opposition to Defendant, Martin Gottlieb & Associates, LLC’s
Motion to Dismiss Amended Complaint (Document 116), wherein counsel for Gottlieb requests

leave to file its reply brief several hours late, without objection. The motion for leave to file will
be granted, and the Court will consider the reply brief.
The Court has also reviewed Defendants Michael J. Boyko, M.D., Mark Perni, D.O.,
BestPractices of West Virginia, Inc., BestPractices, Inc., Holiday Acquisition Company, Inc.,
EmCare, Inc., and Envision Healthcare Corporation’s Motion to Dismiss Amended Complaint
(Document 110), Defendants Michael J. Boyko, M.D., Mark Perni, D.O., BestPractices of West
Virginia, Inc., BestPractices, Inc., Holiday Acquisition Company, Inc., EmCare, Inc., and Envision
Healthcare Corporation’s Memorandum in Support of Their Motion to Dismiss Amended
Complaint (Document 111), the Relators’ Memorandum in Opposition to Defendants Boyko,
Perni, BestPractices of West Virginia, BestPractices Inc., Holiday Acquisitions Company, Inc.,
EmCare, Inc., and Envision Healthcare Corporation’s Motion to Dismiss (Document 113), and
Defendants Michael J. Boyko, M.D., Mark Perni, D.O., BestPractices of West Virginia, Inc.,
BestPractices, Inc., Holiday Acquisition Company, Inc., EmCare, Inc., and Envision Healthcare
Corporation’s Reply Memorandum in Support of Their Motion to Dismiss the Amended Complaint
(Document 114), as well as all attachments. For the reasons stated herein, the Court finds that the
Gottlieb’s motion to dismiss should be granted and that the remaining Defendants’ motion to
dismiss should be granted in part and denied in part.
FACTUAL ALLEGATIONS
The Relator, Cortney Taylor, initiated this action pursuant to the False Claims Act (FCA)
on behalf of herself and the United States with a Complaint for Violations of the False Claims Act,
31 U.S.C. § 3729, et seq. (Document 1) filed on October 25, 2017. The complaint remained sealed
until September 6, 2018. Ms. Taylor named the following Defendants: Michael J. Boyko, M.D.,
2

Mark Perni, D.O., BestPractices of West Virginia, Inc. (BPWV), Martin Gottlieb & Associates
LLC (Gottlieb), BestPractices, Inc. (BP), Holiday Acquisition Company, Inc., EmCare, Inc., and
Envision Healthcare Corporation. The Court granted motions to dismiss with the exception of a
single claim against Dr. Perni on June 7, 2019. Ms. Taylor filed the amended complaint on
September 17, 2019. She seeks to recover damages and penalties on behalf of the United States
arising from alleged false claims made or caused to be made by the Defendants and/or false records
material to false claims made or caused to be made by the Defendants.
BPWV contracted to manage the Camden-Clark Medical Center (CCMC) emergency
department. Dr. Boyko was employed by BPWV and served as a physician at CCMC. Dr. Perni
was a locum tenens physician who was providing medical services at CCMC on August 2, 2012,
although he had not signed the contract governing BPWV’s relationship with CCMC. Because
Dr. Boyko was not scheduled to work on August 2–3, 2012, the Relator alleges that it was not
permissible for Dr. Perni to take his place for billing purposes. Jennifer Angelilli was a nurse
practitioner employed by BPWV and working at CCMC. She also had not signed the contract.
Her credentials to practice as a nurse practitioner required that she be supervised by a physician.
She did not have a supervising physician at CCMC.
BPWV’s state corporate license to conduct business and medical license were revoked on
November 1, 2011, due to failure to file an annual report and filing fee. Notice of the license
revocation was mailed to Dr. Thomas Mayer, the sole owner and President of BPWV. Dr. Mayer
was also CEO of BP and Executive Vice President of EmCare. BPWV continued to operate the
emergency department of Camden-Clark Medical Center following the license revocations until
March 2013, including submitting claims for reimbursement to Medicare for at least 25,000
3

patients. BPWV did not notify CMS (Centers for Medicare & Medicaid Services) of the license
revocations. The Relator alleges that CMS treats revocation of a business license as material to
payment decisions based on administrative decisions revoking providers’ billing privileges.
Regulations permit CMS to revoke providers’ billing privileges as a result of noncompliance with
enrollment requirements, which include maintaining applicable state and federal licenses.
Ms. Taylor received treatment for post-caesarean section abdominal pain at the CCMC
emergency department on August 2–3, 2012. She is a Medicare beneficiary, and claims for her
care were submitted to Medicare for payment. Her medical records list Dr. Perni as her attending
physician and Ms. Angelilli as providing additional care. Ms. Angelilli diagnosed Ms. Taylor
with cellulitis, then documented that her condition had improved and that she was stable prior to
discharging her with a prescription for antibiotics around 4:00 a.m., on August 3, 2012. Dr. Perni
did not make entries on the medical record until approximately two hours after Ms. Taylor had
been discharged. He did not provide her with medical care but signed her record for billing
purposes, completing an “Attending Note” box to “[permit] a provider to bill at a higher level of
care because a physician was involved.” (Am. Compl. at ¶ 234.)
Ms. Taylor sought additional treatment on August 3, 2012. She was diagnosed with
necrotizing fasciitis, a potentially fatal condition, and transferred to West Virginia University for
surgical intervention and treatment on August 4, 2012. 1 Gottlieb prepared an invoice for Ms.
Taylor, billing $668 with a code applicable to severe, life threatening, presenting problems. The
invoice included a code modifier to reflect the provision of services by a locum tenens physician
in place of the regular physician, since Dr. Perni was replacing Dr. Boyko during Ms. Taylor’s

1 Ms. Taylor brought a medical malpractice action in state court as a result of the misdiagnosis.

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visit. However, Dr. Boyko had never been scheduled to work on that date. Gottlieb submitted
the invoice for payment, using billing codes applicable to care provided by a physician, though it
had the medical records showing that Dr. Perni signed the records two hours after Ms. Taylor was
released from the hospital. Medicare reimbursed BPWV at the full physician rate, rather than the
85% rate applicable to care provided by a nurse practitioner.
STANDARD OF REVIEW
A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure
to state a claim upon which relief can be granted tests the legal sufficiency of a complaint or
pleading. Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009); Giarratano v. Johnson, 521
F.3d 298, 302 (4th Cir. 2008). Federal Rule of Civil Procedure 8(a)(2) requires that a pleading
contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.
R. Civ. P. 8(a)(2). Additionally, allegations “must be simple, concise, and direct.” Fed. R. Civ.
P. 8(d)(1).

“[T]he pleading standard Rule 8 announces does not require ‘detailed factual

allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp v. Twombly,
550 U.S. 544, 555 (2007)). In other words, “a complaint must contain “more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly,
550 U.S. at 555. Moreover, “a complaint [will not] suffice if it tenders naked assertions devoid
of further factual enhancements.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557)
(internal quotation marks omitted).
Rule 9(b) of the Federal Rules of Civil Procedure requires that a party alleging fraud or
mistake “must state with particularity the circumstances constituting fraud or mistake,” although
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allegations related to state of mind “may be alleged generally.” “To satisfy Rule 9(b), a plaintiff
asserting a claim under the [False Claims] Act ‘must, at a minimum, describe the time, place, and
contents of the false representations, as well as the identity of the person making the
misrepresentation and what he obtained thereby.’” U.S. ex rel. Nathan v. Takeda Pharm. N. Am.,
Inc., 707 F.3d 451, 455–56 (4th Cir. 2013) (quoting United States ex rel. Wilson v. Kellogg Brown
& Root, Inc., 525 F.3d 370, 379 (4th Cir.2008)). The Fourth Circuit cautions courts to “adhere[]
firmly to the strictures of Rule 9(b) in applying its terms to cases brought under the Act,”
explaining that “[t]he multiple purposes of Rule 9(b), namely, of providing notice to a defendant
of its alleged misconduct, of preventing frivolous suits, of eliminating fraud actions in which all
of the facts are learned after discovery, and of protecting defendants from harm to their goodwill
and reputation are as applicable in cases brought under the Act as they are in other fraud cases.”
Id. at 456 (internal quotation marks and citations omitted).
When reviewing a motion to dismiss, the Court must “accept as true all of the factual
allegations contained in the complaint.” Erickson v. Pardus, 551 U.S. 89, 93 (2007). The Court
must also “draw[ ] all reasonable factual inferences from those facts in the plaintiff’s favor.”
Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). However, statements of bare
legal conclusions “are not entitled to the assumption of truth” and are insufficient to state a claim.
Iqbal, 556 U.S. at 679. Furthermore, the court need not “accept as true unwarranted inferences,
unreasonable conclusions, or arguments.” E. Shore Mkts., v. J.D. Assocs. Ltd. P’ship, 213 F.3d
175, 180 (4th Cir. 2000). “Threadbare recitals of the elements of a cause of action, supported by
mere conclusory statements, do not suffice . . . [because courts] ‘are not bound to accept as true a

6

legal conclusion couched as a factual allegation.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550
U.S. at 555).
DISCUSSION
The Defendants 2 argue that Ms. Taylor’s amendments are insufficient to permit the claims
this Court previously dismissed to go forward. They assert that the revocation of BPWV’s state
medical and business licenses as a result of its failure to pay a nominal fee and file renewal
paperwork is not material to the payment of Medicare claims. The Defendants argue that the
administrative decisions relied upon by the Relator in the amended complaint do not “show that
Medicare conditions payment of claims on the validity of a business or corporate medical license,
that state license revocations are central to patients’ care, that the government has ever denied
payment of a Medicare claim because of an administrative revocation, or that the United States
has ever brought enforcement actions based on such non-compliance.” (Document 112 at 2,
emphasis in original.) They further contend that the Relator has failed to adequately plead
scienter. As to the upcoding claims, the Defendants argue that the amended complaint “still fails
to plead any details regarding any claims other than the one for Taylor’s bill or any Defendants’
knowledge as to the alleged upcoding of Taylor’s bill (other than Dr. Perni).” (Id. at 3, emphasis
in original.) Both Gottlieb and the other Defendants contend that the amended complaint does
not contain sufficient factual allegations tying each individual Defendant to the alleged fraudulent
schemes. Gottlieb further emphasizes that there is not a requirement that a billing processor
“verify who performed the services, or what services were performed” rather than simply relying
on the records. (Document 109 at 2.)
2 Gottlieb briefed a motion to dismiss separate from the remaining Defendants, who jointly briefed their motion.
Because the arguments overlap, the Court has addressed the arguments jointly.

7

The Relator asserts that she has adequately alleged that “CMS routinely revokes providers’
enrollment and billing privileges when CMS learns of a provider engaging in the unlicensed
practice of medicine, including corporate providers.” (Document 113 at 2–3.) She relies on
administrative decisions from the DHHS Departmental Appeals Board, finding that licensure
violations were inconsistent with compliance with Medicare enrollment requirements and
revoking Medicare privileges.
revocation.

She further notes regulations requiring notice of license

She contends that her allegations regarding Dr. Mayer’s notice of the license

revocation, combined with his roles at BP, BPWV, and EmCare and the corporate relationships
between EmCare, Envision, and Holiday, suffice to allege scienter. As to the upcoding violations,
the Relator focuses on her allegations of a long-standing policy at BP and BPWV to have
physicians sign off on charts for patients who were seen only by mid-level providers. She argues
that “[t]his evidence also strongly implies, if not outright demonstrates, that Relator’s experience
was hardly an isolated incident.” (Id. at 17.) She contends that her allegations sufficiently allege
presentment as to both schemes, arguing that BPWV was the exclusive ER provider, and bills
would necessarily have been generated as to each of the 25,000-plus Medicare patients who visited
the ER during the period BPWV lacked requisite licensing authority. Although she concedes that
she lacks information of specific billing records for other patients, she argues that other patients
were “almost certainly in the same position as the Relator” and contends that her Amended
Complaint contains sufficient particularity as to the alleged false claims. (Document 112 at 8.)
A. License Revocations
The Court will first address the allegation that BPWV’s license revocations, as well as
failures to fully comply with the terms of BPWV’s contract with CCMC, rendered all claims issued
8

to Medicare during the applicable time period to be fraudulent or false. The Court previously
found that the original complaint did not allege facts sufficient to support a finding that revocation
of a business license resulting from failure to renew the license was material to payment decisions.
The Relator added additional allegations in the amended complaint. However, the Court finds
that those allegations, if proven, remain insufficient to establish materiality.
The Supreme Court addressed the application of the FCA to the cases brought under the
“false certification theory” in a 2016 case. Universal Health Servs., Inc. v. United States ex rel.
Escobar, 136 S. Ct. 1989, 1995 (2016). The Court found that “liability can attach when the
defendant submits a claim for payment that makes specific representations about the goods or
services provided, but knowingly fails to disclose the defendant’s non-compliance with a statutory,
regulatory, or contractual requirement.

In these circumstances, liability may attach if the

omission renders those representations misleading.” Id.

The Supreme Court held that the

misrepresentation must be material to the Government’s payment decision to be actionable and
described a ‘rigorous’ materiality standard. Id. at 1996. It explained that “the Government’s
decision to expressly identify a provision as a condition of payment is relevant, but not
automatically dispositive” in evaluating materiality. Id. at 2003. “[P]roof of materiality can
include, but is not necessarily limited to, evidence that the defendant knows that the Government
consistently refuses to pay claims in the mine run of cases based on noncompliance with the
particular statutory, regulatory, or contractual requirement.” Id. at 2003–04. The Supreme Court
specifically contemplated that courts would consider materiality at the motion to dismiss or
summary judgment stage, noting that “False Claims Act plaintiffs must also plead their claims

9

with plausibility and particularity under Federal Rules of Civil Procedure 8 and 9(b) by…pleading
facts to support allegations of materiality.” Id. at n. 6.
In Escobar, a Medicaid beneficiary received counseling services that the provider billed to
Medicaid. Several of the practitioners who treated her, as well as other practitioners at the facility,
were unqualified, unlicensed, and unsupervised, yet provided counseling and prescriptions in
violation of regulations to the contrary. The providers “misrepresented their qualifications and
licensing status to the Federal Government to obtain individual National Provider Identification
numbers” in order to qualify for reimbursement, and the facility submitted reimbursement claims
applicable to services its employees were not qualified to provide. Id. at 1997. The Supreme
Court approved the theory of liability but remanded for the lower courts to determine in the first
instance whether the relator adequately stated a claim, including issues of materiality and scienter.
The First Circuit concluded that the alleged misrepresentations in Escobar were material,
reasoning that regulatory compliance was a condition of payment, that licensing and supervision
were central requirements, and that there was no evidence that the government paid claims despite
knowing of the violations. United States ex rel. Escobar v. Universal Health Servs., Inc., 842
F.3d 103, 110 (1st Cir. 2016).
The Fourth Circuit applied Escobar in United States v. Triple Canopy, Inc., a case
involving false certifications that security guards hired to provide base security in an overseas
combat zone met a marksmanship requirement. 857 F.3d 174, 179 (4th Cir.), cert. dismissed, 138
S. Ct. 370 (2017). The court concluded that “common sense and Triple Canopy’s own actions in
covering up the noncompliance” demonstrated that the marksmanship requirement was material.
Id. In addition, the court noted that “the Government did not renew its contract for base security
10

with Triple Canopy and immediately intervened in the litigation,” further establishing that the
“falsehood affected the Government’s decision to pay.” Id.
West Virginia law requires corporate entities like BPWV to file an annual report and pay
a fee to maintain business and corporate medical licenses. Maintaining such licenses, in turn, is
required to manage a medical facility. Medicare and Medicaid require entities and individuals
seeking reimbursement to follow all applicable laws and regulations and to inform CMS of any
change in licensure status. BPWV had the required licenses when it entered into its initial contract
to manage the CCMC ER, but the licenses were revoked when it failed to file the required
paperwork and pay the fee to the state. It continued to manage the ER and submit reimbursement
claims without notifying CMS of the license revocations.
Contrary to the facts in Escobar, the regulatory violation and licensing issue here was not
“central” to the services provided to patients and reimbursed by Medicare. BPWV’s failure to
maintain its business and medical licenses brought it out of compliance with the regulations, but
there are no allegations that BPWV’s license status impacted the core medical services provided
to patients and reimbursed by Medicare or the qualifications of the medical personnel providing
care at CCMC. The United States declined to intervene in this matter. There is no evidence that
the Defendants had knowledge of any refusal by CMS to pay claims under similar circumstances.
The Relator relies heavily on administrative decisions, particularly Acute Care
Homenursing Services, Inc., DAB No. 2837 (2017) (H.H.S. Dec. 19, 2017). 3

Acute Care

3 The Relator cites other administrative decisions involving license revocations that resulted from misconduct, as
opposed to paperwork errors or revocations resulting solely from failure to file for renewal or pay standard fees. The
Court has focused on Acute Care Homenursing both because the Relator’s arguments centered on it and because it
has sufficient factual similarity to permit useful analysis, while decisions involving revocation of a provider’s medical
license following criminal charges, for example, provide little insight relevant to this case.

11

Homenursing was enrolled in Medicare, but its articles of incorporation and authority to do
business were revoked for failure to pay corporate franchise taxes under Ohio law in 1999. The
president and owner of the company also owned another business, AC Health Care Services,
operating as Primary Nursing Care, which shared a practice location with Acute Care
Homenursing, but was not enrolled in Medicare.

Acute Care Homenursing filed renewal

applications with CMS that falsely conflated the two businesses and failed to disclose the
revocation of its articles of incorporation. CMS revoked Acute Care Homenursing’s Medicare
enrollment as a result of its noncompliance with various enrollment requirements related to
provision of complete, accurate, and truthful information and its failure to comply with licensing
requirements.
The decision makes clear that review “is limited to determining whether CMS’s action is
legally authorized and does not extend to second-guessing whether CMS properly exercised its
discretion in deciding to revoke a particular provider.” Acute Care Homenursing Services, Inc.,
DAB No. 2837 at *8 (2017) (H.H.S. Dec. 19, 2017). The decision is simply a finding that Acute
Care Homenursing violated certain regulations and enrollment requirements sufficient to authorize
CMS to revoke its enrollment. The DAB specifically distinguishes the standards applicable to
the False Claims Act, noting that it contains knowledge requirements not present for revocations,
and it rejects arguments that CMS must “consider the nature, importance or potential for program
detriment” of any false information prior to revoking Medicare enrollment. Id. at *7. The DAB
notes that provision of false information about corporate identity “is material, if not central, to any
enrollment application” and could result in “confusion and disruption to the billing and claims
process.” Id.
12

The FCA demands substantially more. CMS is entitled to revoke Medicare enrollment
for violation of many regulatory provisions, whether or not they are material to the service and
care provided.

The Supreme Court specifically explained that the FCA is not designed to

“punish[] garden-variety breaches of contract or regulatory violations” and a “misrepresentation
cannot be deemed material merely because the Government designates compliance with a
particular statutory, regulatory, or contractual requirement as a condition of payment” or has the
option to decline payment based on the noncompliance. Universal Health Servs., Inc. v. United
States, 136 S. Ct. 1989, 2003 (2016). CMS’s decision, on a single occasion, to revoke Medicare
enrollment status prospectively based on the misrepresentation of corporate licensure status, is not
sufficient to establish that BPWV’s failure to comply with state licensing regulations was material
to a payment decision for services already rendered. BPWV’s noncompliance cannot fairly be
described as more than “minor or insubstantial.” Id. Thus, the Court finds that the Relator has
not adequately alleged facts supporting a finding that the ministerial revocation of BPWV’s state
licenses were material.
The amended complaint continues to fall short regarding scienter as well.

The

amendments assert additional facts as to Dr. Mayer’s relationships and the relationships between
the various Defendants.

However, the Relator’s theory still requires an inference that the

Defendants were aware that the licenses had been revoked, were aware that Medicare would refuse
to pay any claims for treatment at the CCMC ER if it knew of those license revocations, and chose
to defraud Medicare rather than file the proper paperwork with the State of West Virginia and pay
a nominal fee. This is not a case in which a defendant received a significant benefit by failing to
comply with the applicable regulation or contract term by relying on unqualified personnel or
13

failing to perform claimed services altogether. The allegations presented do not plausibly lead to
the conclusion that the Defendants knowingly chose to submit false claims, rather than spending a
few minutes and a few dollars to renew BPWV’s business and medical licenses. 4 The reasonable
inference arising from the factual allegations contained in the complaint is that BPWV and BP
acted negligently in failing to complete required paperwork, much as an individual might
negligently fail to renew her car registration after receiving mailed notice. Because the Relator
did not state sufficient allegations regarding materiality or scienter, the Court finds that the
Defendants’ motions to dismiss should be granted as to the implied false certification allegations.
B. Upcoding Allegations
The Relator next alleges that the Defendants improperly billed services provided solely by
a nurse practitioner at a physician rate. The Relator alleges that she discovered that Medicare was
billed for her ER visit using a code applicable to care provided by a physician for a problem of
high severity. She alleges that she actually saw only a nurse practitioner, who diagnosed her with
cellulitis and discharged her with a prescription for antibiotics. She further alleges that Dr. Perni
testified during her medical malpractice action that he signed her medical chart as her Attending
Physician only for billing purposes but was not responsible for her care. 5 In addition, she alleges
that BP and BPWV had a practice of instructing physicians to sign off on medical charts for
patients seen by mid-level providers in order to bill at the higher physician rate.

4 In other words, this alleged scheme did not involve a substantial benefit to the Defendants or a substantial loss to
the United States. The Defendants continued to receive payments after BPWV’s licenses were revoked, but returning
to compliance would have required minimal effort and money. The United States, in turn, paid claims for medical
care provided to patients by qualified personnel.
5 The Relator also alleges that it was improper for Dr. Perni to bill as a locum tenens provider because Dr. Boyko was
not originally scheduled to work on the date in question. Because the amended complaint does not plead any facts
suggesting that the scheduling arrangements of the physicians would be material to payment, the Court will not further
address that issue.

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It is well-established that upcoding, or billing for a more expensive service than that
provided, is a type of fraud that may be remedied by the FCA. United States ex rel. Presser v.
Acacia Mental Health Clinic, LLC, 836 F.3d 770, 779 (7th Cir. 2016) (The “complaint sufficiently
alleges that the defendants misused a billing code and falsely represented to the state and federal
governments that a certain treatment was given by certain medical staff when in fact it was not.”);
U.S. ex rel. Bledsoe v. Cmty. Health Sys., Inc., 501 F.3d 493, 498, fn. 2 (6th Cir. 2007) (describing
upcoding as “a common form of Medicare fraud”).
Accepting the Relator’s factual allegations as true, the nurse practitioner did not provide
treatment incident to the services of a physician when she treated Ms. Taylor. Ms. Taylor was
not seen by a physician at all, and Dr. Perni did not consider himself responsible for her care. He
signed her medical records after she had been discharged. He admitted that he filled out the
medical record in a manner designed to ensure Ms. Taylor’s care would be billed at the full
physician rate, and that he did so only for billing purposes. There is no reasonable interpretation
of the regulations that would permit billing for care provided by a physician under the facts
presented. Under these alleged facts, the Court continues to find that the Relator has adequately
alleged that Dr. Perni knowingly created a false record material to a false or fraudulent claim made
to Medicare.
However, the Relator’s allegations still fall short as to the remaining Defendants.
Particularly in light of the Rule 9(b) standard, the complaint does not contain factual support for
the conclusory allegations that the remaining Defendants knew that the medical records were false.
The regulations do permit care provided by mid-level providers to be billed at a physician rate in
some circumstances. Therefore, to assert a claim, the Relator must assert facts supporting a
15

conclusion that each Defendant was aware that Dr. Perni did not actually provide consultation
regarding the Relator’s care but completed the record inaccurately solely for billing purposes.
Although the amended complaint alleges an ongoing upcoding scheme, it does not suggest that
any Defendant other than Dr. Perni had knowledge of the disparity between the care provided and
the medical record in the Relator’s case. Gottlieb received the medical records as generated by
Dr. Perni and generated bills as directed by BPWV. There are no factual allegations suggesting
that any other Defendant had any involvement in the creation of Ms. Taylor’s medical record or
the generation and presentation of the claim to Medicare based on those records. Likewise, there
are no factual allegations suggesting that any other Defendant had any knowledge of the truth or
falsity of the information contained in the medical record and resulting claim. Therefore, the
claims related to Ms. Taylor’s medical bills must be dismissed as to all Defendants except Dr.
Perni.
The Relator asserts that the Defendants engaged in a practice of upcoding. Such schemes,
including the presentment of false claims, must be alleged with particularity. The Fourth Circuit
has held that “an FCA plaintiff must, at a minimum, describe the time, place, and contents of the
false representations, as well as the identity of the person making the misrepresentation and what
he obtained thereby.” U.S. ex rel. Wilson v. Kellogg Brown & Root, Inc., 525 F.3d 370, 379 (4th
Cir. 2008). Further, “liability under the Act attaches only to a claim actually presented to the
government for payment, not to the underlying fraudulent scheme,” and therefore, alleging the
contours of a scheme without the specifics of the claims is generally insufficient. U.S. ex rel.
Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 456 (4th Cir. 2013). The court held that
“when a defendant's actions, as alleged and as reasonably inferred from the allegations, could have
16

led, but need not necessarily have led, to the submission of false claims, a relator must allege with
particularity that specific false claims actually were presented to the government for payment.”
Id. at 457 (emphasis in original).
The complaint contains no details as to any false claim other than the bill for Ms. Taylor’s
care. The regulations regarding the appropriate billing codes are complex and proper billing turns
on the facts of each case, including the level of involvement of both a mid-level provider and a
physician. There are no factual allegations regarding the time or the contents of any false
representations in other medical bills, nor are there specific allegations regarding the identity of
the individuals allegedly making such false claims. The heightened pleading standard is designed
to eliminate actions in which such facts can be learned only through discovery. The Relator
argues that she could not be expected to have access to detailed medical records. The FCA does
not open the doors of discovery to every potential relator who uncovers a hint of impropriety. The
FCA is available only to those who can begin litigation with relatively detailed information about
the alleged false claims. The Court cannot reasonably infer from the allegations in the complaint
that additional “specific, identifiable claims” were necessarily presented for payment. Id. at 458.
Because allegations of any false claims based on upcoding for patients other than Ms. Taylor rely
on speculation, the Court finds that the motions to dismiss should be granted as to such claims.
CONCLUSION
Wherefore, after thorough review and careful consideration, the Court ORDERS that
Defendant Martin Gottlieb & Associates, LLC’s Motion for Leave to File Response to Plaintiff’s
Memorandum in Opposition to Defendant, Martin Gottlieb & Associates, LLC’s Motion to Dismiss

17

Amended Complaint (Document 116) be GRANTED and that Defendant Martin Gottlieb &
Associates, LLC’s Motion to Dismiss Amended Complaint (Document 108) be GRANTED.
The Court further ORDERS that Defendants Michael J. Boyko, M.D., Mark Perni, D.O.,
BestPractices of West Virginia, Inc., BestPractices, Inc., Holiday Acquisition Company, Inc.,
EmCare, Inc., and Envision Healthcare Corporation’s Motion to Dismiss Amended Complaint
(Document 110) be DENIED as to the claims, asserted in Counts One and Two, that Dr. Perni
made, or caused to be made, false records and/or a false claim, as to the records and billing
associated with the Relator’s August 2-3 emergency room visit, and GRANTED as to all other
claims and all other Defendants.
The Court DIRECTS the Clerk to send a certified copy of this Order to counsel of record
and to any unrepresented party.
ENTER:

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January 31, 2020