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February 22, 2013

Realtors pled sufficient facts to sustain most of their federal and state FCA claims, but could not sustain their retaliation claim

By Susan L. Smith, JD, MA

Two medical coding experts who had been employed by Indianapolis Neurosurgical Group, Inc. (ING), for the most part, sufficiently pled violations of federal False Claims Act (FCA) and the Indiana False Claims Act (Indiana FCA) to sustain their qui tam lawsuit against ING and individual physicians (physicians) that practiced medicine at ING (United States of America and the State of Indiana ex rel Herron v Indianapolis Neurological Group, Inc., February 20, 2013, Magnus-Stinson, J). The court found that the relators’ allegations regarding the physicians’ participation in three schemes, coupled with numerous specific examples of how those schemes were carried out, were sufficient to satisfy the FCA pleading requirements. The relators also sufficiently pled their Indiana FCA claims even though some of the examples of misconduct they cited occurred prior to the Indiana FCA’s enactment in 2005 and, thus, those claims were dismissed. Furthermore, the retaliation claims were dismissed for failure to allege that the defendants had notice of the qui tam action.

The relators’ allegations. The relators claimed that ING and the physicians violated the FCA and Indiana FCA by presenting false claims, making or using a false record or statement, and using a false record to avoid an obligation to refund (see 31 U.S.C. sec. 3729(a) and Ind. Code sec. 5-11-5.5-2, respectively). In addition, the relators alleged violations of the FCA and the Indiana FCA for retaliation (see 31 U.S.C. sec 3730(h) and Ind. Code sec. 5-11-5.5-8, respectively). Specifically, the relators alleged that ING and the physicians engaged in three fraudulent schemes. First for evaluation and management (E&M) services, all of the physicians allegedly deliberately billed E&M visits at higher intensity levels and higher reimbursed visit types than justified based on the actual visit, boosting reimbursements from the government by 50 percent or more. Second, for nonphysician services, all of the physicians allegedly routinely billed for such services as “incident to” even in situations for which the nonphysician performed the entire procedure without a supervising physician’s involvement. Third, for certain specified procedures, the physicians billed for procedures they did not perform instead of the less lucrative procedures that they did perform.

FCA claims. ING and the physicians contended that the relators failed to plead the claims against them with sufficient particularity by improperly lumping the physicians together as one homogeneous unit and by not providing enough detail regarding the three fraud schemes to satisfy heightened pleading requirements. The court found that the relators’ allegations were enough to put ING and all of the physicians on notice of what they need to defend against as to the claims related E&M services and “incident to” billing. The relators alleged widespread schemes among ING and the physicians and provided detailed allegations of numerous examples for each scheme. The court said that even though the relators alleged that all of the physicians participated in the schemes, but only cited specific examples involving certain physicians, the relators did not need to provide a specific example of each type of fraud for each defendant.

Although the court concluded that the relators met the pleading requirements, the court limited the relators’ claims to their characterization in their response brief. The court ordered the relators to prepare a claim table as part of the case management plan. The relators must organize the claim table by each alleged scheme, separating the procedures scheme into five parts (one for each procedure identified). The relators also must indicate the statutes that each alleged scheme violates and the specific physicians implicated in each scheme and procedure. The claim table will serve as a benchmark for future discovery, motion practice, and potentially jury instructions, the court said.

Indiana FCA. The court dismissed the Indiana FCA claims against two physicians because the relators conceded that the alleged fraudulent billing of those two physicians pre-date the enactment of the Indiana FCA. Therefore, the relators’ claims against those physicians are only under the federal FCA. Moreover, ING and the other physicians argued that the relators cannot assert claims for violation of the Indiana FCA related to activities that occurred before 2005, when the Indiana FCA was enacted. To the extent the second amended complaint could be read to plead claims under the Indiana FCA prior to its enactment date, the court dismissed the claims; however, other claims stand because the relators sufficiently pled their Indiana FCA claims. The court clarified that to succeed on the merits, the relators will need to present specific evidence of Indiana FCA violations that occurred after 2005.

Statute of limitations and retaliation claims. The court dismissed any FCA claims in the second amended complaint that could be read to have been submitted before December 14, 2000, based on the FCA statute of limitations. The court also dismissed the retaliation claims, because the relator did not adequately state retaliation claims under the FCA or the Indiana FCA. To state a claim for retaliatory discharge under sec. 3730(h), the relator must allege that: (1) he acted in furtherance of a FCA enforcement action; (2) the defendants knew he was engaged in this protected conduct; and (3) the defendants were motivated, at least in part, to terminate him because of the protected conduct. While the relator sufficiently alleged that ING and the physicians knew he believed their billing practices were improper and illegal, he failed to allege that ING and the physicians were aware he was pursuing a qui tam action or that he had reported their conduct to the government.

The case number is 1:06-cv-1778-JMS-DML.

Attorneys: Jill Z. Julian, United States Attorney’s Office, for United States of America. Mary Jane Lapointe (Lapointe Law Firm PC) for State of Indiana. Brian S. Strawbridge (Krieg Devault LLP) for Indianapolis Neurosurgical Group, Inc.

Companies: Indianapolis Neurosurgical Group, Inc.

MainStory: TopStory FCANews BillingNews IndianaNews

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