Justia Government Contracts Opinion Summaries

The Ninth Circuit reversed the district court's dismissal of a qui tam action brought by relator under the False Claims Act, alleging that defendants submitted, or caused to be submitted, Medicare claims falsely certifying that patients' inpatient hospitalizations were medically necessary.After determining that it had jurisdiction, the panel held that a plaintiff need not allege falsity beyond the requirements adopted by Congress in the FCA, which primarily punishes those who submit, conspire to submit, or aid in the submission of false or fraudulent claims. The panel wrote that Congress imposed no requirement of proving "objective falsity," and the panel had no authority to rewrite the statute to add such a requirement. The panel held that a doctor’s clinical opinion must be judged under the same standard as any other representation. The panel explained that a doctor, like anyone else, can express an opinion that he knows to be false, or that he makes in reckless disregard of its truth or falsity. Therefore, a false certification of medical necessity can give rise to FCA liability. The panel also held that a false certification of medical necessity can be material because medical necessity is a statutory prerequisite to Medicare reimbursement. View "Winter v. Gardens Regional Hospital & Medical Center, Inc." on Justia Law

Care Alternatives provides hospice care to New Jersey patients, employing “interdisciplinary teams” of registered nurses, chaplains, social workers, home health aides, and therapists working alongside independent physicians who serve as hospice medical directors. Former Alternatives employees filed suit under the False Claims Act, 31 U.S.C. 3729–3733 alleging that Alternatives admitted patients who were ineligible for hospice care and directed its employees to improperly alter those patients’ Medicare certifications to reflect eligibility. They retained an expert, who opined in his report that, based on the records of the 47 patients he examined, the patients were inappropriately certified for hospice care 35 percent of the time. Alternatives’ expert testified that a reasonable physician would have found all of those patients hospice-eligible. The district court determined that a mere difference of opinion between experts regarding the accuracy of the prognosis was insufficient to create a triable dispute of fact as to the element of falsity and required that the plaintiffs provide evidence of an objective falsehood. Upon finding they had not adduced such evidence, the court granted Alternatives summary judgment. The Third Circuit vacated, rejecting the objective falsehood requirement for FCA falsity. The plaintiffs’ expert testimony created a genuine dispute of material fact as to falsity. View "Druding v. Care Alternatives" on Justia Law

States may provide certain home-based services through Medicaid's Home and Community Based Waiver program, 42 U.S.C. 1396n(c). Illinois operates a waiver under which it contracts with non-profit organizations (ISCs) to provide case management services for adults with developmental disabilities receiving home- and community-based services as part of Medicaid. Illinois awarded 17 ISC contracts through a non-competitive, annual renewal process. The plaintiffs had received contracts for at least 25 years. In 2018, the state announced a new competitive bidding process to begin on July 1, 2019. The plaintiffs submitted bids but learned in January that their contracts would not be renewed. They sued under 42 U.S.C. 1983, alleging violations of Medicaid’s free-choice-of-provider provision, 42 U.S.C. 1396a(a)(23). On June 5, 2019, with new contracts to go into effect in less than 30 days, they sought a preliminary injunction. The district court denied their motion on June 25, reasoning that ISCs were not “qualified providers” under the statute. The plaintiffs appealed that same day. Four days later, they sought emergency injunctive relief pending appeal, which the Seventh Circuit denied. Months later, at oral argument, plaintiffs’ counsel acknowledged that vacating the new contracts would be too disruptive. The Seventh Circuit dismissed the appeal. With the plaintiffs no longer challenging the denial of their preliminary injunction, it is unnecessary to address the meaning of “qualified providers” or determine what kinds of services the plaintiffs provide. The passage of time has rendered the issue moot. View "Western Illinois Service Coordination v. Illinois Department of Human Services" on Justia Law

University of Pittsburgh Medical Center includes 20 hospitals. Its more than 2,700 doctors are employed by Medical Center subsidiaries. Each surgeon had a base salary and an annual Work-Unit quota. Every medical service is worth a certain number of Work Units, which are one component of Relative Value Units (RVUs). RVUs are the units that Medicare uses to measure how much a medical procedure is worth. The surgeons were rewarded or punished based on how many Work Units they generated. The number of Work Units billed by the Neurosurgery Department more than doubled in 2006-2009. The relators accuse the surgeons of artificially boosting their Work Units: The surgeons said they acted as assistants on surgeries and as teaching physicians when they did not and billed for procedures that never happened. They did surgeries that were medically unnecessary or needlessly complex. Most of the surgeons reported total Work Units that put them in the top 10% of neurosurgeons nationwide. Whenever a surgeon did a procedure at one of the hospitals, the Medical Center billed for hospital and ancillary services. The United States intervened in a suit as to the physician services claims, settling those claims for $2.5 million. It declined to intervene in the hospital services claims. The Third Circuit reversed the dismissal of those claims. The relators adequately pleaded violations of the Stark Act, 42 U.S.C. 1395nn(b)(4), which forbids hospitals to bill Medicare for certain services when the hospital has a financial relationship with the doctor who requested those services. It is likely that the surgeons' pay is so high that it must take referrals into account. Stark Act exceptions work like affirmative defenses; the burden lies with the defendant, even under the False Claims Act, 31 U.S.C. 3729(a)(1)(A). View "United States v. University of Pittsburgh Medical Center" on Justia Law

After three former AseraCare employees alleged that AseraCare had a practice of knowingly submitting unsubstantiated Medicare claims in violation of the False Claims Act, the Government intervened and filed the operative complaint.The Eleventh Circuit held that a clinical judgment of terminal illness warranting hospice benefits under Medicare cannot be deemed false, for purposes of the False Claims Act, when there is only a reasonable disagreement between medical experts as to the accuracy of that conclusion, with no other evidence to prove the falsity of the assessment. However, the court held that the Government should have been allowed to rely on the entire record, not just the trial record, in making its case that disputed issues of fact, beyond just the difference of opinion between experts, existed sufficient to warrant denial of the district court’s post-verdict sua sponte reconsideration of summary judgment on the falsity question. Accordingly, the court affirmed in part and remanded in part. View "United States v. Aseracare, Inc." on Justia Law

The Medicare program offers additional payments to institutions that serve a “disproportionate number” of low-income patients, 42 U.S.C. 1395ww(d)(5)(F)(i)(I), calculated using the hospital’s “Medicare fraction.” The fraction’s denominator is the time the hospital spent caring for patients entitled to Medicare Part A benefits; the numerator is the time the hospital spent caring for Part-A-entitled patients who were also entitled to income support payments under the Social Security Act. Medicare Part C (Medicare Advantage) was created in 1997. Part C, beneficiaries may choose to have the government pay their private insurance premiums rather than pay for their hospital care directly. Part C enrollees tend to be wealthier than Part A enrollees, so counting them makes the fraction smaller and reduces hospitals’ payments. In 2014, the Medicare website indicated that fractions for fiscal year 2012 included Part C patients. Hospitals sued, claiming violation the Medicare Act’s requirement to provide public notice and a 60-day comment period for any “rule, requirement, or other statement of policy . . . that establishes or changes a substantive legal standard governing . . . the payment for services.”The Supreme Court affirmed the D.C. Circuit in agreeing with the hospitals. The government has not identified a lawful excuse for neglecting its statutory notice-and-comment obligations. The 2014 announcement established or changed a “substantive legal standard” not an interpretive legal standard. The Medicare Act and the Administrative Procedures Act do not use the word “substantive” in the same way. The Medicare Act contemplates that “statements of policy” can establish or change a “substantive legal standard." Had Congress wanted to follow the APA in the Medicare Act and exempt interpretive rules and policy statements from notice and comment, it could have cross-referenced the APA exemption, 5 U.S.C. 553(b)(A). View "Azar v. Allina Health Services" on Justia Law

Medicare pays for doctors’ home visits if a patient is homebound. Mobile Doctors offered physician services to homebound Medicare beneficiaries, hiring doctors who assigned their Medicare billing rights to the company. Upon receipt of payment, Mobile would pay the physician-employee a percentage of what Mobile received from billing Medicare. Many of Mobile’s patients did not actually qualify as homebound. Some doctors signed certifications for additional unneeded treatment from companies that provided at-home nursing or physical therapy services—companies that had referred the patients to Mobile. Mobile submitted Medicare codes for more serious and more expensive diagnoses or procedures than the provider actually diagnosed or performed. Mobile instructed physicians to list at least three diagnoses in the patient file; if the doctors did not list enough, a staff member added more. Mobile only paid the physicians if they checked at least one of the top two billing codes. Doctors who billed for the higher of the top two codes were paid more. Mobile also paid for “standing orders” for testing, although Medicare prohibits testing done under standing orders. Daneshvar joined Mobile as a physician in 2012. After following Mobile’s policies Daneshvar was convicted of conspiracy to commit healthcare fraud but found not guilty of healthcare fraud; he was sentenced to 24 months' imprisonment. The Sixth Circuit affirmed. Daneshvar’s trial was fair; none of the district court’s rulings during that proceeding should be reversed. There was no reversible error with his sentencing. View "United States v. Daneshvar" on Justia Law

Nita and her husband, Kirtish, pled guilty to defrauding Medicare (18 U.S.C. 1347), based on having forged physicians’ signatures on diagnostic reports and having conducted diagnostic testing without the required physician supervision. The government then brought this civil action for the same fraudulent schemes against Nita, Nita’s healthcare company (Heart Solution), Kirtish, and Kirtish’s healthcare company (Biosound). The district court granted the government summary judgment, relying on the convictions and plea colloquies in the criminal case, essentially concluding that Nita had admitted to all elements and issues relevant to her civil liability. Nita and Heart Solution appealed. The Third Circuit affirmed Nita’s liability under the False Claims Act, 31 U.S.C. 3729(a)(1)(A) and for common law fraud but vacated findings that Heart Solution is estopped from contesting liability and damages for all claims and Nita is estopped from contesting liability and damages for the remaining common law claims. The district court failed to dissect the issues that were determined in the criminal case from those that were not, lumping together Nita and Heart Solution, even though Heart Solution was not involved in the criminal case. It also failed to disaggregate claims Medicare paid to Nita and Heart Solution from those paid to Kirtish and Biosound. The plea colloquy did not clarify ownership interests in the companies; who, specifically, made certain misrepresentations; nor whether one company was paid the entire amount or whether the payments were divided between the companies. View "Doe v. Heart Solution PC" on Justia Law

From 1996-2011 Pennsylvania claimed the costs of a training program, the Pennsylvania Restraint Reduction Initiative, “to train long-term care facility staff in the use of alternative measures to physical and chemical restraints,” as administrative costs under its Medicaid program, 42 U.S.C. 1396b(a)(7) . The Centers for Medicare & Medicaid Services (CMS) reimbursed Pennsylvania for about $3 million. After an audit, CMS sought a return of the money on the ground that funds spent on training programs are not reimbursable as administrative costs under Medicaid. CMS relied heavily on a 1994 State Medicaid Director Letter. The Appeals Board, district court, and Third Circuit rejected the state’s arguments that the 1994 Letter was an invalid substantive rule, that the Letter’s text does not exclude the training costs from reimbursement, that the Letter imposed an ambiguous condition on a federal grant, that the Appeals Board abused its discretion in denying discovery, that the HHS Grants Administration Manual limits the disallowance period to three years, and that the district court should have taken judicial notice of the 2015 CMS Question and Answer document concerning training costs. The court noted CMS could have reimbursed Pennsylvania if Pennsylvania factored the amount into its rate-setting scheme instead of claiming it as administrative costs. View "Commonwealth of Pennsylvania Department of Human Services v. United States" on Justia Law

A three-year “risk corridors” program described in the Patient Protection and Affordable Care Act, 42 U.S.C. 18001, implemented by the Department of Health and Human Services (HHS), was intended to promote participation in insurance exchanges. Participating insurers, whose costs of providing coverage exceeded the premiums received (using a statutory formula) were to be paid a share of their excess costs while participating plans whose premiums exceeded their costs would pay in a share of their profits. The program “permit[ted] issuers to lower [premiums] by not adding a risk premium" for uncertainties in the 2014-2016 markets. The actual total "payments in"were less than requested "payments out" and Congress prohibited HHS from using its appropriations for the program. Prorated payments were issued. The insurer filed suit. The Federal Circuit affirmed summary judgment in favor of the government. The statute created an obligation of the government to pay exchange participants the amount indicated by the statutory formula but riders in the FY 2015 and 2016 appropriations bills repealed or suspended the obligation to make payments out in an aggregate amount exceeding payments in. Congress made the policy choice to cap payments. No statement or action by the government evinced an intention to form a contract; the risk corridors program was simply an incentive program. Because there was no contract, the insurer’s “takings” claim also failed. View "Land of Lincoln Mutual Health Insurance Co. v. United States" on Justia Law