I recommend to you U.S. ex rel Johnson v. Kaner Medical Group et al., a non-intervened qui tam case out of the 5th Circuit: two District Court opinions and the 5th Circuit's decision affirming the District Court's sua sponte grant of summary judgment in favor of the defendants. See 2014 WL 7239537 (December 19, 2014, N.D. TX), 2015 WL 631654 (February 12, 2015, N.D. TX), and 2016 WL 873816, __ Fed. Appx.__ (5th Cir., March 7, 2016). Essentially, Kaner stands for the proposition that you cannot make a False Claims Act ("FCA") case based on a medical provider's mistakes in filling out and submitting incorrect Medicare paperwork, when the evidence shows that the provider did, in fact, provide the billed service and had no intent to "cheat" Medicare. Additionally, the District Court's opinions are critical of the Relator for not really having the case she had originally pled in her initial and first amended complaints, wrongfully bypassing Rule 9(b) with theories she later abandoned in order to obtain discovery, and then seeking to build a new case through discovery.
The 5th Circuit affirmed the District Court's "sua sponte" grant of summary judgment in favor of the defendants, a medical clinic and its owner, that provided allergy services. The Relator had alleged that the medical clinic submitted false claims to Medicare and Tricare because the clinic billed "for allergy services performed by medical assistants under the referring provider's National Provider Identifier ('NPI") number when the referring provider was not the provider supervising services." The medical clinic, it turned out, had an internal practice when filling out the CMS-1500 billing form of always using the same NPI number of the clinic's referring physician as the NPI number of the provider-supervisor of the medical assistants who actually provided the allergy treatment, regardless of whether that supervisor was on site or not at the clinic when the services were provided to the patient. Beyond that paperwork error, however, the medical assistants did, in fact, provide the services to the patients, and they appeared to have always been supervised by some one who was qualified.
The 5th Circuit observed that a "knowing" violation of the False Claims Act "is an elevated standard" and that a "finding of negligence or gross negligence is not sufficient to satisfy the [FCA's] scienter requirement." The Court explained further that "mismanagement --alone-- of programs that receive federal dollars is not enough to create FCA liability," and that the "record indicates that, at most, [the clinic's] misunderstanding of CMS's requirements was negligent." Citing prior precedent, the 5th Circuit reiterated that "[t]he FCA is not a general enforcement device for federal statutes, regulations and contracts, "but is instead the "Government's primary litigation tool for recovering losses from fraud." The District Court's opinions are also worth the read on what mens rea is required to prove a False Claims Act case. The FCA, the District Court emphasized, "does not create liability for improper internal policies unless, as a result of such acts, the provider knowingly asks the Government to pay amounts it does not owe."
Though not mentioned in the 5th Circuit's opinion, the District Court criticized the Relator for abandoning the claims she originally pled and attempting to use discovery to find a viable claim. For example, in denying the Relator's motion for partial summary judgment in its 2014 opinion, the District Court criticized the Relator's attempt to inject new theories of FCA liability, saying: "[t]o whatever extent the grounds of the motion might be viewed to expand the . . . claim alleged by plaintiff in her second amended complaint, the court is not giving effect to the expansion because the court is not allowing plaintiff to add to her pleaded claims by assertions made for the first time in her motion for partial summary judgment."
In its 2015 opinion granting summary judgment sua sponte in favor of the defendants, the Court stated that it was "disturbed" about the "volume of discovery that has been conducted in this action and they attempts by the plaintiff to build her case exclusively on that discovery." "By pleading what appear to have been false claims in her original complaint," the Court explained, "plaintiff probably avoided dismissal and was thus able to engage in extensive discovery directed against defendants seemingly for the purpose of seeking to create out of whole cloth the appearance of the basis for an FCA claim." In turn, that discovery, "ultimately provided [plaintiff] the resources with which to inundate the Court with her 7,076 page appendix and other documents, apparently in the belief on plaintiff's part that quantity rather than quality of summary judgment evidence would carry the day for her." The Court, moreover, stated that it "does not believe that the intent of the FCA was to allow a relator to file a fictitious complaint to the end of opening the door to discovery, hoping that the discovery might uncover facts that could be used in asserting an FCA claim."
In sum, Kaner is another instructive example that FCA cases must be founded on a real intent to cheat the government and not on a provider's mistakes or negligence in complying with technical regulatory requirements. Here, the Medicare provider mistakenly filled out the CMS-1500 form, but the Court essentially found that not to be a material error. Kaner is also another instance where a court has criticized a relator for not having the case she pled and misusing the FCA by attempting to build a new FCA case by getting access to discovery.