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From Health Law Daily, December 19, 2017

Relator may still proceed with qui tam action against Boston Heart Diagnostics

By Brian Craig, J.D.

Although a laboratory may rely on the ordering physician’s determination of medical necessity, a relator may still proceed with a False Claims Act (FCA) cause of action against Boston Heart Diagnostics Corporation (Boston Heart), a federal district court held, ruling on a motion for reconsideration. The court denied Boston Heart’s renewed motion to dismiss the relator’s claim that Boston Heart knowingly submitted false claims that certain cardiovascular tests it performs for patients covered by Medicaid and Medicare are medically necessary (U.S. ex rel. Groat v. Boston Heart Diagnostics Corp., December 11, 2017, Walton, R.).

Background. The relator, a doctor and the National Medical Director of Women’s Health and Genetics at health insurance company United Healthcare (United), alleged that Boston Heart, a clinical laboratory in Framingham, Massachusetts, which provides cardiovascular diagnostic testing, violated the FCA and analog state false claims statutes by performing tests that were not medically necessary and billing for them. On June 9, 2017, the federal district court granted in part and denied in part Boston Heart’s motion to dismiss the relator’s complaint (see Relator may proceed with qui tam action against Boston Heart Diagnostics, June 14, 2017) Boston Heart then filed a motion for reconsideration of the previous decision.

Motion for reconsideration. The court recognized that a motion for reconsideration should not be granted unless the movant presents either newly discovered evidence or errors of law or fact that need correction. The court recognized that it "overstated" the obligations of laboratories with respect to making medical necessity determinations, but the court remains convinced that laboratories have a legal duty to ensure that they do not submit claims for medically unnecessary tests. Boston Heart also argued that the federal regulation regarding laboratory recordkeeping "also underscore[s] that physicians, and not laboratories, establish the medical necessity of patient tests." The court clarified that even though the Medicare statute requires the laboratory to certify the medical necessity of any test for which it makes a claim for payment, the laboratory is not required to make an independent determination of medical necessity, but rather may rely on the ordering physician’s determination.

Fraud allegations. Even though the court clarified that Boston Heart is not required to independently determine the medical necessity of tests ordered by physicians, the relator’s allegation that Boston Heart engaged in a scheme to encourage non-cardiology physicians to order medically unnecessary tests through a false marketing campaign and pre-printed test requisition forms would constitute a knowing violation of its "legal duty to ensure that it is not submitting false or incorrect claims to Government . . . payors."Therefore, the court found that the relator sufficiently alleged facts that satisfy the falsity and knowledge elements of her federal and state presentment and false statements claims warranting denial of the renewed motion to dismiss. The relator alleged facts that Boston Heart submitted false claims by engaging in a scheme that encouraged non-cardiology physicians to order medically unnecessary tests, and then billing the Government for those tests.

The case is No. 1:15-cv-00487-RBW.

Attorneys: Russell D. Paul (Berger & Montague, PC) for Tina D. Groat United States ex rel. Christopher H. Lindstrom (Nutter McClennen & Fish LLP) for Boston Heart Diagnostics Corp.

Companies: Boston Heart Diagnostics Corp.

MainStory: TopStory CaseDecisions CMSNews BillingNews FCANews FraudNews MedicaidPaymentNews PaymentNews QuiTamNews DistrictofColumbiaNews

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