companies operated a referral scheme in violation of the AKS, and as a result, submitted false claims for payment to Medicare. The relators alleged that Bethany Hospice doctors referred Medicare beneficiaries to Bethany Hospice and that nearly all of Bethany Hospice’s patients were covered by Medicare. They also alleged that they had a general knowledge of billing practices, reviewed referral and billing data and confirmed that claims were submitted
rendering provider. 102 Nonetheless, the district court held that the relator failed to satisfy Rule 9(b) because she did not allege key facts for those patients such as dates the claims were submitted or the amounts of the claims, nor did she include any allegations of personal knowledge of billing practices. In U.S. ex rel. Zafirov v. Florida Med. Assocs. LLC , the district court dismissed a relator’s complaint alleging that the defendants employed a two-part scheme where physician defendants brought in patients for medically unnecessary appointments and health maintenance organization defendants submitted false and incorrect diagnosis codes to the government to increase capitated payments. 103 The district court found that the complaint failed to allege facts showing that the defendants submitted a false claim to the government. While the complaint described the defendants’ specific conduct as consistent with allegations that the defendants submitted false claims, the district court pointed out that Rule 9(b) “requires more than inferences, consistencies, and suppositions.” And, even though the complaint alleged that the defendants submitted “hundreds of thousands” of false claims, the complaint failed to provide the dates that the codes were submitted, who submitted the claims and how the claims were material to the government. 104 The Seventh Circuit has often taken a less strict view of the presentment requirement. “Mindful” of the Seventh Circuit’s warning against taking an “overly rigid view” of the pleading requirements of Rule 9(b), the district court in U.S. ex rel. Snider v. Centers for Pain Control, Inc. , denied the defendants’ motion to dismiss the relators’ claims that their marketing practices violated the AKS and resulted in false claims. 105 The relator alleged that the defendant clinic and its physician owner offered free massage therapy with the purchase of trigger point therapy, thereby illegally inducing Medicare and Medicaid patients to purchase trigger point therapy. The relator pointed to six patients who were not charged for massages on the same day they received trigger point therapy and alleged that patients who were charged for massages did not purchase trigger point therapy, identifying different billing codes used. Lastly, he alleged that 90% of CPC’s patients were Medicare or Medicaid beneficiaries. In contrast to the Eleventh Circuit’s rejection in Estate of Helmly of numerical probabilities supporting an indicia of reliability, the district court here concluded that the allegations created a “reasonable inference that at least some of the patients who purchased trigger point therapy for the free massage incentive received some government aid.”
with other employees. The relators argued that taken together, these allegations lent sufficient indicia of reliability to plead presentment with particularity. The Eleventh Circuit disagreed, reasoning the relators did not have “the personal knowledge or level of participation that can give rise to some indicia of reliability” in the absence of particular facts about representative false claims. Rejecting the relators’ reliance on the hospice company’s Medicare-dependent business model, the Eleventh Circuit explained, “numerical probability is not an indicium of reliability.” As referenced above, the relators in Estate of Helmly filed a petition for certiorari in September, urging the Supreme Court to
Consistent with the controlling appellate
precedent, several district courts within the Eleventh Circuit dismissed relators’ claims for failing to plead presentment with adequate particularity.
resolve what they claim is a split among the circuits in how the presentment requirement is applied under Rule 9(b). In opposing certiorari, Bethany Hospice downplayed the notion of a circuit split, claiming the Eleventh Circuit’s standard is in line with the more lenient standard applied in other circuits. 100 That petition remains before the Supreme Court. Consistent with the controlling appellate precedent, several district courts within the Eleventh Circuit dismissed relators’ claims for failing to plead presentment with adequate particularity. The district court in U.S. ex rel. Musachia v. Pernix Therapeutics, LLC , dismissed the relator’s claims that a free shipping and co-pay waiver program violated the AKS and resulted in false claims. 101 First, the district court held that the relator’s spreadsheet referencing fifty detailed examples of prescriptions filled did not include information such as dates, billing information or amounts charged or paid sufficient to identify a specific false claim. Second, the district court held that the relator did not otherwise plead “specific knowledge about billing practices — i.e., that the person was directly involved with submitting claims to the Government” and thus lacked other indicia of reliability that false claims were submitted. Similarly, in U.S. ex rel. Paul v. Biotronik, Inc. , discussed above, the relator provided 85 examples of patients implanted with devices or placed on home monitoring as a result of an alleged kickback scheme, including dates, products, procedures, invoices and the
102 2021 WL 211474 (M.D. Fla. Jan. 21, 2021). 103 2021 WL 4443119 (M.D. Fla. Sept. 28, 2021). 104
See also United States v. Health First, Inc. , 2021 WL 301089 (M.D. Fla. Jan. 22, 2021) (dismissing complaint where 300-page list of Medicare claims did not specify whether the patient was unlawfully referred or which entity or individual billed the claims); Payne v. Sanon , 2021 WL 307370 (M.D. Fla. Jan. 29, 2021) (dismissing complaint where relator alleged patient dates of testing and testing procedures, but no allegations about claims actually submitted to the government); U.S. ex rel. Stone v. Nature Coast Emergency Medical Foundation, Inc. , 2021 WL 3134725 (M.D. Fla. Mar. 26, 2021) (dismissing complaint where relator failed to “provide any factual basis for [her] conclusory statement ... that bills were submitted to the [g]overnment as a result of [defendant’s] schemes”); U.S. ex rel. Fernandez v. Freedom Health, Inc. , 2021 WL 2954415 (M.D. Fla. May 26, 2021) (dismissing relator’s complaint, holding that relator’s alleged communications with executive about the intention to submit encounter data to reimbursement under Medicare Advantage did not show that the relator was personally in a position to know that false claims were submitted and had a factual basis for his alleged personal knowledge). 105 2021 WL 1783314 (N.D. Ind. May 5, 2021).
100 See also U.S. ex rel. Byrd v. Acadia Healthcare Co. , 2021 WL 1081121 (M.D. La. Mar. 18, 2021) (granting defendant’s motion to dismiss, explaining that while the particular contents of a false claim need not always be presented, this does not absolve the relator of the burden of otherwise identifying sufficient details; “[t]his circuit applies Rule 9(b) to fraud complaints with bite and without apology”). 101 2021 WL 2826429 (N.D. Ala. July 7, 2021).
FALSE CLAIMS ACT UPDATE BASS, BERRY & SIMS | 17
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