Opinion
Civ. No. 97-1680 (RHK/JMM)
August 22, 2001
Gary A. Weissman, Weissman Law Office, Minneapolis, Minnesota; Phillip E. Benson and Linda R. MacLean, Benson Law Office, Anaheim Hills, California; and Donald R. Warren, San Diego, California, for Plaintiff James B. Kinney.
James L. Volling and Lianne Knych, Faegre Benson L.L.P., Minneapolis, Minnesota, and David T. Schultz, Halleland, Lewis, Nilan, Sipkins Johnson, Minneapolis, Minnesota, for Defendant Hennepin Faculty Associates.
MEMORANDUM OPINION AND ORDER
Introduction
James B. Kinney brought this qui tam action against Defendants Hennepin County Medical Center ("HCMC") and Hennepin Faculty Associates ("HFA"), alleging that Defendants violated the False Claims Act ("FCA"), 31 U.S.C. § 3729, by submitting claims to Medicare and Medicaid for the payment of ambulance services that Kinney alleges were false because the ambulance transports were not "medically necessary." Kinney alleges that (1) the Defendants knowingly caused false or fraudulent claims to be presented to the United States government; (2) the Defendants knowingly made false statements or records to get false or fraudulent claims paid by the United States government; and (3) the Defendants conspired to defraud the United States government. By an Order dated January 22, 2001, the Court dismissed HCMC from the lawsuit in light of the Supreme Court's decision in Vermont Agency of Natural Resources, v. United States ex rel. Stevens, 120 S.Ct. 1858 (2000). This Court concluded that Hennepin County — and, hence, HCMC — is not a "person" for purposes of the FCA.
Kinney also asserted a claim for common law fraud. That Count was dismissed without prejudice for lack of standing on Kinney's part, with the understanding that the United States, were it to intervene, would be entitled to assert a common law fraud claim.
In accordance with Rule 54(b) of the Federal Rules of Civil Procedure, the Court expressly directed the entry of judgment on the claims against HCMC, thus allowing Kinney to take an immediate appeal from that decision. No appeal was filed.
The remaining Defendant, HFA, is a non-profit corporation that provides, inter alia, emergency room physician staffing for HCMC. HFA has several motions pending before the Court. HFA initially brought a Motion for Judgment on the Pleadings pursuant to Rules 9(b) and 12(c) of the Federal Rules of Civil Procedure, asserting, among other things, that the qui tam provisions of the FCA violate the Take Care Clause of Article II of the Constitution. In response to that motion, Kinney stated that he had no objection to dismissal of the conspiracy count. (Pl.'s Mem. Opp. Def.'s Mot. for J. on the Pleadings at 3; Hrg. Tr. at 11.) HFA later filed a summary judgment motion and, simultaneously, Kinney filed a motion for partial summary judgment. In connection with his summary judgment motion, Kinney filed two reply affidavits which HFA has moved to strike.
Background
I. The Parties
HCMC is a public, full service hospital that operates an ambulance service for the county, from which it derives income. HCMC's ambulances are called out on between 40,000 and 50,000 ambulance runs per year; about 20,000 of those patients are transported to HCMC itself, the remainder go to other metropolitan area hospitals. (Clinton Dep. at 30 (attached to Knych Aff. at Ex. F); Van Buren Aff. ¶ 4.) HFA is a non-profit corporation whose mission is in patient care, teaching, and research. (Fosbury Dep. at 11 (attached to Knych Aff. as Ex. B).) HFA is comprised of academic physicians. (Id.) HFA has a contract with HCMC to provide administrative, patient care, and teaching services at HCMC, including physician staffing for the emergency room at HCMC. (See id.)
Relator James B. Kinney has been employed for approximately twenty-two years as an HCMC paramedic. (Relator's Aff. ¶ 1 n. 1.) His performance as a paramedic has never been rated less than "fully capable" and has been most frequently rated "significantly above average." (Id. ¶ 2.) Kinney estimates that, during his years of employment at HCMC, he has personally responded to approximately 68,000 "911" calls as a paramedic. (Id. ¶ 1.)
II. The Ambulance Run Sheets
This case involves the "ambulance run sheets" prepared for each ambulance run made by an HCMC ambulance. (See Knych Aff. Ex. J (blank run sheet).) Paramedics complete the vast majority of the run sheet, (see Relator's Aff. ¶ 3; Van Buren Dep. at 21 (attached to Knych Aff. at Ex. K)), taking down demographic information about the patient, the symptoms observed, vital signs measured at the scene, and the treatment administered. (Relator's Aff. ¶¶ 2, 3; Van Buren Dep. at 25.) The paramedics also check a box on the run sheet designating the level of service provided on that run. (See Lappe Dep. at 32 (attached to Knych Aff. at Ex. C); Van Buren Aff. ¶ 5; Relator's Aff. ¶ 3.)
The level of ambulance transport service at issue in this litigation is "ALS-Minor." The abbreviation "ALS" stands for "advanced life support" and correlates to the type of ambulance being used. (See Mahoney Dep. at 19 (attached to Knych Aff. as Ex. E).) The term "minor" reflects the amount of care provided to the patient. Kinney avers that he and his fellow paramedics have been trained that they should not describe the transport service as "ALS-Minor" if there is any chance that transporting the patient to the hospital other than by an ambulance would endanger the patient's health. (Relator's Aff. ¶ 4.)
An ALS ambulance rig has certain equipment on board and its crew has a certain level of training.
HCMC describes ALS Minor care as follows: "Patient requires very little treatment, but should be seen at a hospital for further examination. Physical exam is done. Vital signs should be monitored for changes enroute. Bandaging and cold application may be done." Specific examples of the sorts of patients receiving ALS-Minor care include patients with minor cuts and bruises; patients with finger or toe sprains, strains, fractures, or dislocations; obstetric patients "without delivery or any complications prehospital"; patients with a headache but without a neurological deficit or hypertensive crisis; seizure patients who are not in the midst of a seizure and who, after the paramedics' arrival, do not require an I.V. or airway management, and patients wanting transport only.
Kinney's claim focuses on that portion of the lower right corner of the ambulance run sheet stating, "I certify that it was medically necessary to transport this patient by ambulance," and providing a space for the "attending physician's" signature and the date. Staff physicians at HCMC's emergency room would sign the "medical necessity" block on the yellow copy of the run sheet. Thus, to understand Kinney's claim, one must track the yellow copy of ambulance run sheets through HCMC's billing process.
An ambulance run sheet is a form in triplicate. When a patient arrived by ambulance at HCMC's emergency room, a paramedic would sign off on the run sheet and turn over the form to either a doctor or nurse who would sign a box as the "receiving MD/RN." (See Lappe Dep. at 38, 39-40; Van Buren Dep. at 26-27.) The copies of the run sheet would then be separated. The top sheet (the original) became part of the patient's chart. (Id. at 38; Van Buren Dep. at 23.) The second sheet (yellow) went, ultimately, to HCMC's billing department. (Clinton Dep. at 41; Van Buren Dep. at 23.) The third sheet, if the patient had been transported to HCMC, went to HCMC's emergency medical services department (also known, at times, as the ambulance services department) for its permanent files. (Lappe Dep. at 38; Van Buren Dep. at 23-24.)
Admissions staff in the emergency room would take demographic and insurance information from patients who arrived by ambulance to receive emergency services, either on an outpatient basis or as part of inpatient care. (Weeber Dep. at 7-8 (attached to Knych Aff. at Ex. G).) They would receive the yellow copy of the run sheet and, in registering the patient, would focus on the top part of the form where the patient's name, age, gender, and mailing address are located. (Id. at 13-14.) The admissions staff never checked to see whether the medical necessity block had been signed. (Id.)
After the patient had been treated in the emergency room, the yellow copy of the run sheet went to a staff physician in the emergency room for a signature in the "medical necessity" block on the form. (Lappe Dep. at 42; Clinton Dep. at 34.) Dr. Mahoney stated that, as to some forms, he wrote "No" in the certification box and then signed it. (Mahoney Dep. at 29 (attached to Knych Aff. at Ex. E).) Dr. Clinton likewise stated that he would, infrequently, write "No" or "No, not justified" in the "medical necessity" block. (Clinton Dep. at 33.) None of the emergency room physicians Kinney deposed understood that they were signing the "medical necessity" block to certify compliance with Medicare or Medicaid requirements. (See Clinton Dep. at 36-37; Mahoney Dep. at 28-29, 34.). Accordingly, the physicians Kinney deposed never evaluated "medical necessity" from the standpoint of whether the patient could have been transported to the HCMC emergency room by some means other than ambulance without endangering the patient's health. (See Clinton Dep. at 32, 46-48; Mahoney Dep. at 71-73.)
After leaving the emergency room, the run sheets were forwarded to the ambulance department. (G. Peterson Dep. at 38, 55-56.) The staff in the ambulance services department would review the run sheets and confirm whether the paramedics had recorded their mileage and had checked a level of service box. (See id. at 34.) No one in the ambulance services department ever checked to ensure that the medical necessity box had been signed before sending the run sheets on for coding and to the billing department. (See id. at 38-39.) Geraldine Peterson, manager of ambulance services at HCMC from 1992 until March of 2000, stated that she saw run sheets for HCMC patients or patients who were treated and released from HCMC on which the "medical necessity" block had not been signed. (Id. at 38.) Ms. Peterson also stated that she saw run sheets for ALS-Minor transports on which the "medical necessity" block had been signed; she did not know, however, whether those were for Medicaid or Medicare patients. (Id. at 58.)
For coding, it appears that HCMC generally used personnel from an outside agency called MBS to enter data from the run sheets into HCMC's patient accounting system. (Hansen Dep. at 90, 95-96 (attached to Knych Aff. at Ex. Q).) Each level of ambulance service identified on the run sheet had a corresponding internal HCMC billing code. (See Knych Aff. Ex. J; see also Hansen Dep. at 79.) Data entry staff would input the internal HCMC ambulance service code into the patient accounting system. That code was entered into the HCMC computer system regardless of whether the "medical necessity" block on that particular run sheet had been signed. (Zimmerman Aff. ¶ 3.)
The treatment levels and codes are as follows: Scene Treatment (code number 4100280-9); ALS-Minor (code number 4100401-1); ALS-Moderate (code number 4100402-9); ALS-Major (code number 4100403-7); ALS-Critical (code number 4100404-5); Oxygen (code number 4100406-0); and CPA Scene Treatment (code number 4100301-3). (See Knych Aff. Ex. J.)
HCMC programmed its patient accounting system automatically to convert the internal billing code for an "ALS-Minor" ambulance run — code number 4100401-1 — automatically into an HCPCS code and a revenue code. (Stoltz Dep. at 77; Hansen Dep. at 79, 93.) The HCPCS code to correspond to the HCMC internal billing code was determined by the ambulance department. (Hansen Dep. at 97; Stoltz Dep. at 77.) The computer system posted the appropriate charges for ambulance transport services to a patient's account based on those HCPCS and revenue codes. After the charges had been posted, the patient's account must wait to qualify for billing (typically based on a set number of days after registration or admission). (Stoltz Dep. at 98-99 (attached to Knych Aff. at Ex. I).) Once the waiting period was completed, bills and claims would be generated and printed. (Id. at 99.)
The HCPCS codes are derived from the American Medical Association's Current Procedures Terminology Manual and Health Care Providers Code System.
HCMC assigned revenue code 540 to all ambulance transport services, including ALS-Minor services. (Hansen Dep. at 128, 156.)
HCMC charged Medicare for ambulance transport services using a UB-92 electronic claim form. (Stoltz Dep. at 39.) HCMC's patient accounting system generated the electronic UB-92 Medicare claim form automatically. (Id. at 41, 59.) The UB-92 claim form stated the HCPCS code and corresponding revenue code for the services provided. (Id. at 59, 75; Hansen Dep. at 127-28, 155.) The electronic claim forms did not include any physician certifications and did not state that any such certifications were on file as part of the claims submission. (Stoltz Aff. ¶ 5.) Before a claim was sent to Medicare, a printed version of the UB-92 form was delivered to the billing department for review. (Stoltz Dep. at 99.) The billing department had the yellow copy of the run sheet, but staff in the billing department never reviewed the run sheet for completeness or to see if the "medical necessity" block had been signed. (Id. at 42-43, 49-50, 92.)
Analysis I. HFA's Motion for Judgment on the Pleadings A. Constitutionality of the FCA's Qui Tam Provisions
HFA's main argument in its Motion for Judgment on the Pleadings is that Kinney's continued prosecution of this action after the United States declined to intervene lacks any control by the Attorney General and its office of United States Attorneys and, therefore, violates the Take Care Clause of Article II of the Constitution. The Take Care Clause provides that the Executive "shall take Care that the Laws be faithfully executed." U.S. CONST. art. II, § 3. HFA contends that, by granting qui tam relators the power to prosecute actions on behalf of the United States, Congress has violated the separation of powers doctrine by undermining the constitutionally assigned powers of the Executive Branch. Specifically, HFA argues, the Executive's authority under the Take Care Clause includes the power to investigate and to prosecute claims relating to offenses against the United States. HFA claims that, by permitting a private relator to pursue a FCA claim on behalf of the United States after it chooses not to intervene, the relator's suit abrogates the Executive's authority to control litigation relating to harms suffered by the United States.
In support of this argument, HFA relies principally on Riley v. St. Luke's Episcopal Hospital, 196 F.3d 514 (5th Cir. 1999), in which a panel of the Fifth Circuit held that the qui tam provisions of the FCA violated the separation of powers doctrine under both the Take Care and the Appointments Clauses of Article II of the Constitution. On May 25, 2001, however, the Fifth Circuit Court of Appeals, sitting en banc, reversed the panel's decision in Riley. Riley v. St. Luke's Episcopal Hosp. ("Riley II"), 252 F.3d 749, 757 (5th Cir. 2001) (en banc). After reviewing the Executive Branch's control over qui tam actions initiated under the FCA, id. at 753-57, the Fifth Circuit held that "the qui tam provisions of the FCA do not violate the principle of separation of powers by impermissibly infringing upon the constitutional duty of the Executive to take care that the laws are faithfully executed under the Take Care Clause of Article II." Id. at 758. Judges Smith and DeMoss filed a lengthy dissent setting out in great detail why, in their view, the qui tam provisions impermissibly encroach on the Executive's responsibilities under the Take Care Clause. The Court has reviewed the en banc opinion in Riley II and the dissent, and is persuaded that the majority's reasoning is correct. The Court will not dismiss Kinney's Amended Complaint on grounds of unconstitutionality.
The Appointments Clause states that the Executive "shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments."
As of the date of this Memorandum Opinion and Order, no petition for certiorari from the en banc decision had been filed.
B. Dismissal Based upon the Court's Prior Ruling Regarding HCMC
The remaining counts of the Amended Complaint allege that a "false or fraudulent claim" was either (1) presented to the United States government (under § 3729(a)(1) of the FCA), or (2) paid by the government (under § 3729(a)(2) of the FCA). HFA urges the Court to construe the phrase "false or fraudulent claim" — not defined by the statute — to mean a claim for payment to the United States government that is itself subject to liability under the FCA. HFA then argues that, because HCMC is not subject to liability under the FCA, the claims that HCMC submitted to the United States government cannot be considered "false or fraudulent claims." The only case HFA cites regarding what a "false or fraudulent claim" is comes from the Fourth Circuit, in which the Court of Appeals stated that "[t]he [FCA] attaches liability, not to the underlying fraudulent activity or to the United States government's wrongful paying, but to the `claim for payment.'" Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4th Cir. 1999).
The Court finds both HFA's argument and the Fourth Circuit's reasoning in Harrison on this point unpersuasive. The plain language of § 3729(a) of the FCA is unambiguous: liability is imposed on the person who engages in prohibited acts, not the claim. This Court's earlier ruling that HCMC is not a "person" for purposes of imposing liability under the FCA did not resolve either (a) whether HFA is a person subject to FCA liability, or (b) whether the claims presented to Medicare or Medicaid for payment in this case were false or fraudulent.
II. HFA's Motion to Strike the Benson and Powell Affidavits
Before addressing the merits of the summary judgment motions, one motion regarding the record needs to be addressed. Together with his reply brief in support of his partial summary judgment motion, Kinney submitted the affidavits of Phillip Benson and Dennis Powell. HFA has objected to these affidavits and moved that they be stricken.
Kinney offers the affidavit of Dennis W. Powell, a veteran paramedic for HCMC, to refute HFA's assertion that HFA emergency room physicians only "sometimes" signed certifications of medical necessity. Powell avers that HFA physicians routinely signed all medical necessity certifications for ambulance transports to HCMC and did so pursuant to a policy imposed by HCMC. HFA argues that this affidavit should be stricken as an improper reply affidavit. HFA points out that, in its opening memorandum in support of its motion for summary judgment, it presented evidence tending to establish that HFA physicians signed only some of the certifications on ambulance run sheets. Thus, it did not raise this factual issue for the first time in its opposition memorandum.
Kinney asserts that, when HFA incorporated the factual assertions from its opening summary judgment memorandum into its memorandum in opposition to Kinney's motion, HFA opened the door to this rebuttal evidence. That argument is disingenuous, at best. As Rule 56(e) of the Federal Rules of Civil Procedure plainly states, "[w]hen a motion for summary judgment is made and supported as provided in this rule . . . the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e) (emphasis added). If Kinney had evidence available which tended to create a genuine issue of material fact as to the frequency and regularity with which the "medical necessity" blocks on the run sheets were signed, the time to have presented such evidence was in opposition to HFA's motion for summary judgment. There is nothing "new" in HFA's memorandum opposing Kinney's summary judgment motion to warrant submitting the affidavit from Powell with Kinney's reply memorandum. A cross-motion for summary judgment is not a license to sandbag. Powell's affidavit will be stricken.
The second affidavit is from one of Kinney's counsel, Phillip Benson. Over ten pages long, the majority of the affidavit — more than six-and-a-half pages — is devoted to addressing two "misrepresentations of fact" allegedly made by HFA. The first of these involves whether only some or all medical necessity certifications on ambulance run sheets were signed. As discussed above, the time to have addressed that issue was prior to Kinney's reply brief. Kinney knew HFA maintained that certifications were "sometimes" signed from the first pages of HFA's opening memorandum.
The second "factual misrepresentation" Benson's affidavit addresses is whether deposition testimony cited by Kinney in his initial brief in support of his partial summary judgment motion supports his factual assertions that (a) "in order to get paid by Medicare, HFA physicians signed the medical necessity block of the ambulance run sheet for patients delivered to HCMC"; and (b) that "HCMC instructed its paramedics not to check ALS-Minor if the use of other methods of transportation is contraindicated." Benson quotes extensively in his affidavit from the deposition testimony that Kinney had cited (despite the fact that the testimony is already before the Court as an attachment to an earlier memorandum). HFA contends that this portion of Benson's affidavit is argument dressed up as "facts." The Court agrees.
The balance of Mr. Benson's affidavit addresses the twelve exhibits attached to his affidavit, most of which are copies of the texts of the 1990 and 2001 versions of various statutes, regulations, and policy manuals. Mr. Benson avers that the relevant language in these statutes, regulations, et cetera have not changed over the intervening eleven years. In Kinney's memorandum in opposition to HFA's Motion for Summary Judgment, however, he already argued that HFA had contended that physician certifications were not needed for emergency ambulance transports based upon a regulatory provision that was changed in 1999. He further argued, at great length, that HFA failed to point out relevant statutory and regulatory language and that such language has remained unchanged during the relevant time period — 1991 to 1998. The time for Kinney to have presented evidence in support of that argument was in response to HFA's motion. Benson's reply affidavit will also be stricken.
Even if the Court considered the affidavits of Benson and Powell (to the extent they present admissible evidence), it would not change the analysis below with respect to the cross-motions for summary judgment.
III. The Parties' Cross-Motions for Summary Judgment A. Standard of Decision
Summary judgment is proper if, viewing the record in the light most favorable to the nonmoving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party bears the burden of showing that the material facts in the case are undisputed. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Mems v. City of St. Paul, Dep't of Fire Safety Servs., 224 F.3d 735, 738 (8th Cir. 2000). The court must view the evidence, and the inferences which may be reasonably drawn from it, in the light most favorable to the nonmoving party. See Graves v. Arkansas Dep't of Fin. Admin., 229 F.3d 721, 723 (8th Cir. 2000); Calvit v. Minneapolis Pub. Schs., 122 F.3d 1112, 1116 (8th Cir. 1997).The nonmoving party may not rest on mere allegations or denials, but rather must demonstrate the existence of specific facts that create a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); Krenik v. County of Le Sueur, 47 F.3d 953, 957 (8th Cir. 1995). The court does not weigh facts or evaluate the credibility of affidavits and other evidence on a motion for summary judgment. See Liberty Lobby, 477 U.S. at 249. The nonmovant, however, cannot avoid summary judgment in favor of the movant merely by pointing to some alleged factual dispute between the parties. Instead, any fact alleged to be in dispute must be "outcome determinative under prevailing law," that is, it must be material to an essential element of the specific theory of recovery at issue. See Dancy v. Hyster Co., 127 F.3d 649, 652 (8th Cir. 1997), cert. denied, 523 U.S. 1004 (1998); Get Away Club, Inc. v. Coleman, 969 F.2d 664, 666 (8th Cir. 1992).
B. Payments by Medicare and Medicaid for Ambulance Services
Medicare Part B covers, with some limited exceptions that are not relevant to this case, "medical and other health services." 42 U.S.C. § 1395k(a)(2)(B). "Medical and other health services" are defined to include "ambulance service where the use of other methods of transportation is contraindicated by the individual's condition, but only to the extent provided in regulations." 42 U.S.C. § 1395k(b); 1395x(s); see also 42 C.F.R. § 410.10(i). As a condition for the payment of services covered by § 1395k(a)(2), a physician must certify that "in the case of medical and other health services . . . such services are or were medically required." 42 U.S.C. § 1395n(a)(2)(B).
Medicaid is funded by both the federal government and state governments. Minnesota's Medical Assistance program covers transportation costs incurred "solely for obtaining emergency medical care or transportation costs incurred by nonambulatory persons in obtaining emergency or nonemergency medical care when paid directly to an ambulance company, common carrier, or other recognized providers of transportation services." Minn. Stat. § 256B.0625, subd. 17(a). Medical assistance also covers "special transportation," if the service provider "receives and maintains a current physician's order by the recipient's attending physician certifying that the recipient has a physical or mental impairment that would prohibit the recipient from safely accessing and using a bus, taxi, other commercial transportation, or private automobile." The parties appear to agree that, before 1999, the rules implementing Minnesota's Medicaid program stated that "the medical necessity of the ambulance service . . . must be documented by the state report required under Minnesota Statutes § 144E.17." Until section 144E.17 of the Minnesota Statutes was repealed in 1999, HFA documented "medical necessity" for purposes of Medicaid with signatures in the "medical necessity" blocks on the run sheets.
C. Kinney's Remaining FCA Claims
Kinney and HFA have brought cross-motions for summary judgment on the issue of HFA's liability under § 3729(a)(1) and (2) of the FCA for claims submitted by HCMC to Medicare for the payment of ambulance transport charges, specifically for ALS-Minor ambulance services. Section 3729 provides in relevant part:
Any person who
(1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval;
(2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government;
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is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person. . . .31 U.S.C. § 3729(a). The FCA defines "knowing" and "knowingly" to mean "that a person, with respect to information, (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information." 31 U.S.C. § 3729(b). The FCA does not require proof of a specific intent to defraud.
Neither party has clearly addressed the differences in the essential elements of a claim under § 3729(a)(1) and the essential elements of a claim under § 3729(a)(2). The actions prohibited by each section, however, are plainly different. Accordingly, this memorandum opinion considers each statutory claim separately.
1. Liability under § 3729(a)(1)
As stated above, § 3729(a)(1) of the FCA imposes liability on any person who "knowingly presents, or causes to be presented, to an officer or employee of the United States Government . . . a false or fraudulent claim for payment or approval." Kinney does not allege that HFA itself presented a false or fraudulent claim for payment or approval, nor would the record support such a finding. It is undisputed that HCMC presented its Medicare claims for the challenged ambulance transport services electronically, using a UB-92 claim form. Therefore, Kinney cannot establish liability based on a theory that HFA "knowingly present[ed] . . . a false or fraudulent claim for payment or approval."
"[A] claim against the government normally connotes a demand for money or for some transfer of public property." United States v. McNinch, 356 U.S. 595, 599 (1958) (quoting United States v. Tieger, 234 F.2d 589, 591 (3d. Cir. 1956)). The classic example of a false claim under the FCA is a false invoice or bill for goods or services. See, e.g., United States v. Bornstein, 423 U.S. 303, 309 (1976). The term, however, applies more generally to other demands for government funds. United States v. Rivera, 55 F.3d 703, 709 (1st Cir. 1995).
Kinney therefore must establish, under § 3729(a)(1), that HFA knowingly caused a false or fraudulent claim to be presented to the United States government for payment or approval. To establish such a claim, Kinney must prove that (1) HFA caused HCMC to present a claim to the United States government; (2) the claim presented was false or fraudulent; and (3) HFA knew that the claim presented was false or fraudulent. See United States v. Basin Elec. Power Co-op, 248 F.3d 781, 803 (8th Cir. 2001). The parties devote considerable briefing to the issue of whether the Medicare statutes and regulations require a physician certification of medical necessity in order for Medicare to pay for ambulance transport services. The parties also devote considerable briefing to the question of whether HFA's physicians — by signing the "medical necessity" blocks on ambulance run sheets — "caused" HCMC to submit the challenged claims to Medicare for payment. The Court begins with "causation."
Kinney's causation argument, in a nutshell, is that "HFA makes it all possible by having its physicians falsely certify ALS-Minor ambulance runs as `medically necessary' when they do not meet either the Medicare or Medicaid criteria for medically necessary." (Relator Aff. ¶ 10.) Kinney argues that Medicare and Medicaid only reimburse ambulance transport services that are "medically necessary" i.e., that are provided because any other means of transporting the patient presents a, (N.D.Tx. 2001) danger to the patient's health. Kinney contends that the purpose of the "medical necessity" block on the run sheets is to certify to Medicare and Medicaid that the ambulance transport services provided on a particular run satisfy those programs' "medical necessity" requirements. By definition, Kinney asserts, an ALS-Minor run cannot satisfy the definition of "medically necessary" in the Medicare and Medicaid regulations. Therefore, Kinney argues, a signature in the "medical necessity" block for such runs is false and, by signing the "medical necessity" blocks for ALS-Minor ambulance runs that were submitted to Medicare and Medicaid for payment, the HFA emergency room physicians caused the United States government to pay on those claims.
HFA argues that Kinney cannot prove that HFA's certifications of "medical necessity" either "brought about" or "led to" HCMC submitting false or fraudulent Medicare or Medicaid claims for ambulance services. HFA contends that HCMC presented claims for ambulance transport services to Medicare and Medicaid regardless of whether an HFA doctor had signed the "medical necessity" block. Furthermore, HFA contends, nowhere in the course of preparing the Medicare or Medicaid claims for the challenged ambulance transport services did HCMC note — or even consider — whether the physician certification block had been signed. Finally, HFA asserts that the electronic claim forms provided no information about certifications of "medical necessity."
Kinney replies that HFA has mischaracterized the "causation" element required under the FCA. Kinney contends that the real question is whether HFA's conduct was "causally connected" to the ultimate submission of a false claim. Kinney argues that the causation element is met if (1) the Medicare statutes and/or regulations call for a physician certification of "medical necessity"; and (2) an HFA physician signs the certification block on the ambulance run sheet, certifying that the ambulance transport was "medically necessary." The Court disagrees.
Kinney contends that this case is analogous to United States v. Krizek, 111 F.3d 934 (D.C. Cir. 1997), and United States v. Mackby, 243 F.3d 1159 (9th Cir. 2001). In Krizek, the United States sued a psychiatrist and his wife, who worked in her husband's practice and maintained his billing records, alleging that they had submitted over 8,000 false claims for payment by Medicare and Medicaid. Krizek, 111 F.3d at 936. The United States alleged that the Krizeks had sought payment for more extensive treatments than were, in fact, rendered. A five-digit code on the Medicare claim form which the Krizeks submitted identified the services for which payment was being sought. Id. The evidence established that the Krizeks improperly used the code assigned to 45-50 minute individual psychotherapy sessions where shorter, less involved treatment was in fact provided. Id. As a result, Dr. Krizek on several occasions submitted claims for over 21 hours of patient treatment within a 24-hour period. Id. at 936-37. In affirming the judgment against the Krizeks, the court of appeals noted
Kinney also argued for the first time in his reply brief that the "causation" issue in this case is controlled by the Supreme Court's 1943 decision in United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943). In Hess, the respondents were electrical contractors who engaged in collusive bidding, inducing local municipalities and school districts in Pennsylvania to enter into contracts with them. A large portion of the respondents' pay ultimately came from the federal government's Public Works Administration. The Supreme Court reasoned that "by their conduct, the respondents thus caused the government to pay the claims of the local sponsors in order that they might in turn pay respondents under contracts found to have been executed as a result of the fraudulent bidding." Hess, 317 U.S. at 543 (emphasis added). The contractors' fraud caused the local sponsors to pass along "every swollen estimate which was the basic cause for payment of every dollar paid by the PWA into the joint fund for the benefit of respondents." Id. Unlike Hess, there is no evidence here that the HFA emergency room physicians' signatures on ambulance run sheets set in motion a chain of events that resulted in claim forms being submitted to Medicare for ALS-Minor ambulance runs. As Kinney has established, the claim forms identified the disputed ambulance services according to HCPCS and revenue codes that were appropriate only for "medically necessary" ambulance services; those codes were selected, however, as the result of HCMC's actions, not the signatures of HFA physicians on ambulance run sheets. Accordingly, Hess is also distinguishable.
The United States also alleged that the Krizeks had submitted claims seeking payment for services that were medically unnecessary. After a three week bench trial, however, the district court held that the United States had not established that the Krizeks had submitted claims for unnecessary services. Krizek, 111 F.3d at 936.
that Dr. Krizek is not less liable than his wife for these false submissions. As noted, an FCA violation may be established without reference to the subjective intent of the defendant. Dr. Krizek delegated to his wife authority to submit claims on his behalf. In failing utterly to review the false submissions, he acted with reckless disregard.
Krizek, 111 F.3d at 942. Kinney relies upon this passage in arguing that HFA is as liable as HCMC for the allegedly false claims that were submitted for the payment of ambulance transport fees. Kinney argues that, just as Dr. Krizek was ultimately responsible for reviewing the claims presented to Medicare, so HFA was ultimately responsible for properly certifying medical necessity of the ambulance transport services that were billed to Medicare and Medicaid. Significant to the decision in Krizek, however, was the fact that Dr. Krizek had delegated to his wife the authority to submit Medicare claims. HFA did not delegate to HCMC the authority to submit claims for ambulance transport fees. HFA had no control over the content of the claims submitted to Medicare and Medicaid. Nor did HFA have any apparent right to review the claim forms being submitted to Medicare and Medicaid. Thus, Krizek is distinguishable.
The other case Kinney relies upon is United States v. Mackby, in which the owner and managing director of a physical therapy clinic was found liable for knowingly causing false claims to be submitted to Medicare by instructing the clinic's billing company and office manager to use his physician father's provider identification number (PIN) on claim forms used to bill Medicare for physical therapy services provided at the clinic. United States v. Mackby, ___ F.3d ___, 2001 WL 921177 at *1 (9th Cir. Aug. 16, 2001). Medicare pays for physical therapy services when those services are rendered by a physician, by a qualified employee of a physician or physician directed clinic, or by a qualified physical therapist in independent practice. Id. Dr. Mackby's PIN was placed in boxes 24k and 33 of the reimbursement form, leading Medicare to believe that the physical therapy services for which the clinic was submitting claims had been provided by Dr. Mackby or at least "incident to" his supervision. Id. Mackby is distinguishable.
On August 16, 2001, the Ninth Circuit Court of Appeals granted the government's petition for rehearing and withdrew the opinion published at 243 F.3d 1159. The substituted opinion will be published in Federal Reporter (Third). The following discussion of Mackby is taken from the substituted opinion.
In this case, the information on HCMC's UB-92 claim form that would lead Medicare to believe ALS-Minor ambulance transport services were "medically necessary" was the HCPCS and revenue codes. There is no evidence that HFA instructed HCMC to use those codes. Nor is there any evidence that a physician's signature in the "medical necessity" box on the run sheet triggered the selection of the HCPCS and revenue codes that ultimately appeared on the claim forms. Indeed, the evidence presented by Kinney clearly establishes that HCMC chose which HCPCS and revenue codes to assign to ALS-Minor ambulance runs. Furthermore, Kinney has successfully established as undisputed fact that HCMC's computerized patient accounting system automatically converted the internal ALS-Minor transport code into a HCPCS code and a revenue code that implicitly represented that the ambulance services provided were medically necessary. This conversion occurred regardless of whether the "medical necessity" box on a run sheet has been signed. Kinney's theory of causation does not square either with the cases cited or the facts underlying HCMC's billing and claim generation process. The Court concludes that Kinney has failed to establish that there is a jury issue on an essential element of his claim under § 3729(a)(1). Accordingly, the Court will dismiss that claim.
2. Liability Under § 3729(a)(2)
Section 3729(a)(2) imposes liability on a person for knowingly
(a) making a false record or statement to get a false or fraudulent claim paid or approved by the Government;
(b) using a false record or statement to get a false or fraudulent claim paid or approved by the Government;
(c) causing a false record or statement to be made to get a false or fraudulent claim paid or approved by the Government; and
(d) causing a false record or statement to be used to get a false or fraudulent claim paid or approved by the Government.
Under § 3729(a)(2), Kinney alleges that HFA knowingly made or caused to be made false records or statements — namely, certifications of "medical necessity" on ALS-Minor ambulance transports — to get HCMC's claims for such ambulance services paid.
A cause of action under § 3729(a)(2) requires proof of the following elements: "(1) the defendant made a record or statement in order to get the government to pay money; (2) the record or statement was false or fraudulent; and (3) the defendant knew it was false or fraudulent." United States ex rel. Lamers v. City of Green Bay, 168 F.3d 1013, 1018 (7th Cir. 1999). Furthermore, to impose liability on a defendant for making a false statement or record "to get a false or fraudulent claim paid by the Government," the defendant's statement or record needs to be material to getting the claim paid. United States v. Southland Mgmt. Corp., Inc., 95 F. Supp.2d 629, 637 (S.D. Miss. 2000) (citing Kungys v. United States, 485 U.S. 759, 770 (1988)). The question of materiality is a mixed question of law and fact, for the court to decide. See United States ex rel. Berge v. Board of Trustees, 104 F.3d 1453, 1460 (4th Cir.), cert. denied, 522 U.S. 916 (1997).
See also United States ex rel. Bustamante v. United Way/Crusade of Mercy, Inc., No. 98C5551, 2000 WL 690250 at *4 (N.D.Ill. May 25, 2000) (holding that, with respect to the second and third elements, both the record or statement and the claim must be false or fraudulent; and the defendant must know that both the record or statement and the claim were false or fraudulent); United States ex rel. Showell v. Philadelphia AFL, CIO Hosp. Ass'n, No. Civ. A. 98-1916, 2000 WL 424274 at *5 (E.D.Pa. Apr. 18, 2000); United States ex rel. Mikes v. Straus, 84 F. Supp.2d 427, 432 (S.D.N.Y. 1999); United States v. United Techs. Corp., 51 F. Supp.2d 167, 195 (D.Conn. 1999); Wilkins ex rel. United States v. Ohio, 885 F. Supp. 1055, 1059 (S.D.Ohio 1995).
Among the arguments made in support of its summary judgment motion, HFA contends that the physician's signature on the ambulance run sheet did not "cause" HCMC to get paid on the claims submitted to Medicare. This argument addresses a fundamental problem with Kinney's § 3729(a)(2) claim. Section 3729(a)(2)
imposes liability on those who make or use "a false record or statement to get a false or fraudulent claim paid or approved by the Government." If a record or statement were not material to the Government's decision to pay or approve a claim, it could not be used "to get" such a claim paid or approved.
Southland Mgmt. Corp., Inc., 95 F. Supp.2d at 637 n. 8 (quoting from Clarence T. Kipps, Jr., Robert K. Huffman Peter B. Hutt II, Materiality as an Element of Liability Under the False Claims Act, N98CFCB ABA-LGLED B-38-39 (1998)) (emphasis added). In this case, the evidence before the Court is that the government agencies administering the Medicare and Medicaid programs received no information as to whether an HFA physician had signed the run sheets to certify that the ambulance services were "medically necessary." As Kinney has established, any statements made to the United States government (or any state agency distributing federal funds) regarding the "medical necessity" of ambulance transports were inherent in the HCPCS and revenue codes that HCMC assigned to the ALS-Minor ambulance services. Those codes were assigned regardless of whether an emergency room physician had signed the "medical necessity" block on the ambulance run sheet. The presence or absence of a signature on a run sheet had no effect on, and no tendency to effect, whether the claim was paid by Medicare or Medicaid. The Court concludes that Kinney has failed to establish a genuine issue of material fact with respect to an essential element of his claim under § 3729(a)(2) of the FCA. That claim will also be dismissed.
In that respect, this case is also distinguishable from a case prevalently cited by Kinney in his opening memorandum in support of partial summary judgment: American Ambulance Services of Pennsylvania, Inc. v. Sullivan, 761 F. Supp. 1211 (E.D.Pa. 1991) ("AASPI"). The ambulance service provider not only submitted claim forms to Medicare, Part B, for reimbursement, it also attached and submitted Supplemental Documentation for Ambulance Transportation ("SDFAT") forms signed by the patients' doctors that expressly certifyied, inter alia, that the patient's physical condition required movement by a stretcher and that transportation by a means other than ambulance was contraindicated — i.e., medically necessary. AASPI, 761 F. Supp. at 1214. In the present case, no such documentation was submitted with HCMC's claim forms. The Court also notes that AASPI is not a FCA case, but rather is a challenge by AASPI to the method by which Medicare reimbursement decisions were made. Id. at 1215.
Conclusion
Based on the foregoing, and all of the files, records and proceedings herein, IT IS ORDERED THAT
1. Count III of the Amended Complaint — the conspiracy count — is DISMISSED WITH PREJUDICE;
2. Defendant HFA's Motion for Judgment on the Pleadings (Doc. No. 113) is DENIED;
3. Defendant HFA's Motion to Strike the Affidavits of Dennis Powell and Phillip Benson (Doc. No. 162) is GRANTED;.
4. Plaintiff's Motion for Partial Summary Judgment (Doc. No. 142) is DENIED;
5. Defendant HFA's Motion for Summary Judgment (Doc. No. 136) is GRANTED; and
6. The Relator's Amended Complaint is hereby DISMISSED WITH PREJUDICE.
LET JUDGMENT BE ENTERED ACCORDINGLY