Earlier this month, in U.S. ex rel. Polukoff v. St. Mark’s Hospital et al., No. 17-4014 (Jul. 9, 2018), the Tenth Circuit reversed a lower court’s dismissal of FCA claims, holding that “[i]t is possible for a medical judgment to be ‘false or fraudulent’” under the FCA. As previously reported here, the relator had alleged that a cardiologist performed and billed Medicare and Medicaid for unnecessary heart surgeries known as PFO closures. The District of Utah, in granting defendants’ motion to dismiss, had concluded that claims associated with those procedures, in which the doctor represented that the procedures were medically necessary, could not be deemed objectively false because “liability may not be premised on subjective interpretations of imprecise statutory language such as ‘medically reasonable and necessary.’”
The Tenth Circuit rejected the defendants’ argument that it had previously held that United States ex rel. Morton v. A Plus Benefits, Inc., 139 F. App’x 980 (10th Cir. 2005) “create[d] a bright-line rule that a medical judgment can never serve as the basis for an FCA claim.” Drawing in part on precedent from other circuits, the Tenth Circuit held that the physician’s certification of medical necessity could be deemed false for three reasons. First, a medical judgment can be “false or fraudulent” because the Tenth Circuit follows the Supreme Court and takes an “expansive view” of what constitutes “false or fraudulent” for purposes of the FCA. See United States v. Neifert-White Co., 390 U.S. 228, 232 (1968). Second, drawing on First Circuit precedent, opinions can form the basis of FCA liability. See United States ex rel. Loughren v. Unum Grp., 613 F.3d 300, 310 (1st Cir. 2010). And third, relying on Fifth Circuit precedent, “claims for medically unnecessary treatment are actionable under the FCA.” United States ex rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d 370, 376 (5th Cir. 2004).
The Tenth Circuit also relied on the fact that the Medicare Program Integrity Manual contained a definition of “reasonable and necessary” to find that a certification that “a procedure is ‘reasonable and necessary’ is ‘false’ under the FCA if the procedure was not reasonably necessary under the government’s definition of the phrase.” The Court further said that to the extent this broad definition potentially exposes doctors to greater liability under the FCA, those concerns are “effectively addressed through strict enforcement of the [FCA]’s materiality and scienter requirements” which the court described as “rigorous,” adopting Escobar’s characterization of rigorous.
With respect to the Rule 9(b) argument, the Tenth Circuit also reversed the District of Utah’s decision as to whether Dr. Polukoff had pled his claims against defendant Intermountain with sufficient particularity. In particular, the Tenth Circuit said it “excuse[d] deficiencies that result from the plaintiff’s inability to obtain information within the defendant’s exclusive control.”
The Tenth Circuit’s decision is the second recent decision to suggest that statements regarding a physician’s opinion as to whether treatment is medically necessary may be considered “false or fraudulent” under the FCA. On June 28, 2018, a few days prior to the Tenth Circuit ruling in Polukoff, DOJ filed a letter highlighting a reversal by the Sixth Circuit in United States v. Paulus, No. 17-5410 (6th Cir. June 25, 2018). In Paulus, the Sixth Circuit recognized that false statements of opinion could be a basis for FCA liability, which DOJ argued was a rejection of the district court’s per se rule that statements concerning medical analysis can never be false.
DOJ has wasted no time in taking advantage of the July 9, 2018 reversal by the Tenth Circuit, filing a 28(j) letter on July 10, 2018 in the AseraCare litigation that is currently pending before the Eleventh Circuit. As previously reported here, DOJ has appealed its defeat in the district court, which concluded that “expressions of opinion, scientific judgments, or statements as to conclusions about which reasonable minds may differ cannot be false.”
The swiftness of the action taken by DOJ in the AseraCare case, combined with the recent rulings in the Sixth and Tenth Circuits, illustrates the potential significance of the Tenth Circuit’s reversal regarding whether disputed scientific judgments can serve as the basis for “false or fraudulent” claims under the FCA. We will continue to monitor and report on these developments.