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From Health Law Daily, March 6, 2015

FCA upcoding claims go down under weak factual support

By Bryant Storm, J.D.

A district court dismissed the False Claims Act (FCA) (31 U.S. C. § 3729) allegations of a whistleblower physician who alleged that a hospital and an emergency room service provider engaged in fraud by upcoding claims submitted for Medicaid and Medicare reimbursement. The court dismissed the lawsuit because the whistleblower’s allegations failed to provide evidence that the upcoding of medical records resulted in actual submissions of false claims to the federal government (United States ex rel. Gravett v. The Methodist Medical Center of Illinois, March 4, 2015, Shadid, J.).

Fraud. Alan Gravett worked as a physician for Comprehensive Emergency Solutions (CES) at the Methodist Medical Center of Illinois. After Methodist installed a new computer program for medical record and billing purposes—Horizon Clinical Suite—Gravett and others noticed that the program had a tendency to inappropriately upcode services. The program would produce entries that made it “appear that a physician had performed compensable services that were not actually performed or were performed by a non-physician.” Despite concerns expressed by Gravett about the upcoding and potential compliance issues, he was told by his superiors that the program would continue to be used. Gravett was eventually terminated in 2007 after expressing more concerns about the program. According to Gravett, the upcoding at Methodist began as early as 2003 and Methodist and CES promulgated guidelines to encourage the upcoding.

Lawsuit. Gravett filed a qui tam action under the FCA against CES and Methodist. After several procedural hurdles following the government’s decision not to intervene in the action, CMS and Methodist moved to dismiss the case. They filed motions to dismiss on the grounds that the allegations were premised on publically disclosed data, and therefore barred under the FCA’s public disclosure rule, or because the allegations failed to allege that the fraudulent upcoding practices actually resulted in the submission of false claims.

Public disclosure. The court determined that the lawsuit was based upon the publically disclosed data if it described “allegations or transactions that [were] substantially similar to those already in the public domain.” The court reasoned that because Gravett premised some of his lawsuit on specific patients and treatments that occurred after he was terminated, those allegations could not have been based upon personal knowledge. The court held that his belief that the fraudulent practices he was aware of during his employment carried on after he was terminated was insufficient to generate direct, personal knowledge of the fraud. However, because some of the allegations were based upon data from 2006—when Gravett was still employed by CES—the court held that he was not barred by the public disclosure rule.

Actual submission. Methodist and CES also asserted that Gravett failed to identify how it was that the alleged upcoding practice resulted in FCA violations. The court reasoned that Gravett didn’t provide evidence to exclude the possibility that the upcoding resulted in claims submitted to private insurers and not the federal government. Ultimately, the court held, “at a minimum,” to survive a motion to dismiss, Gravett needed to have alleged specific details concerning how the claims were submitted to the government, by “identifying claims, dates, or details of payment.” The court held that Gravett’s employment as a physician suggested there was no reason to believe he had first-hand knowledge of the actual billing practices of CES or Methodist. The court held that Gravett’s general allegation that upcoded information in the medical records resulted in false claims was insufficient to meet the FCA’s pleading standard.

The case number is No. 12-1008.

Attorneys: Devon C. Bruce (Power Rogers & Smith PC) for Alan Gravett. John E. Childress, U.S. Attorney's Office, for United States. Gregory Michael Luce (Skadden Arps Slate Meagher & Flom) for The Methodist Medical Center of Illinois. L. Lee Smith (Hinshaw & Culbertson) for Comprehensive Emergency Solutions SC.

Companies: The Methodist Medical Center of Illinois; Comprehensive Emergency Solutions SC

MainStory: TopStory FCANews QuiTamNews BillingNews FraudNews EmploymentNews IllinoisNews

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