The Sixth Circuit Court of Appeals recently issued a decision overturning an $11.1 million False Claims Act (FCA) verdict against MedQuest Associates, Inc. (MedQuest) for submitting claims to Medicare in violation of the Medicare conditions of participation. More specifically, the district court granted the government's motion for summary judgment, holding that the FCA was violated based on two facts: (1) MedQuest used supervising physicians in two of its independent diagnostic testing facilities (IDTFs) who had not been approved by the local Medicare carrier to supervise the range of tests offered at the IDTFs, and (2) MedQuest failed to properly report a change of ownership of a physician practice it acquired and continued to submit claims under the former owner's provider number.

MedQuest recognized that some of the supervising physicians were not approved by the Medicare contractor to provide direct supervision for contrast procedures and that some of the physicians were not radiologists as required by the contractor's local medical review policy. Nevertheless, the Sixth Circuit held that neither the "express" nor "implied" theory of FCA violations would support liability against MedQuest because each of these theories requires that the underlying regulation be a "condition of payment" and the supervising physician requirements are not conditions of payment. Accordingly, because all of the procedures for which MedQuest billed the Medicare program were provided under the direct supervision of a physician, albeit not necessarily one who was approved by the contractor, MedQuest met the "reasonable and necessary" requirements for Medicare payment. The court also held that there currently is no "regulation conditioning payment on an accurate, updated enrollment form reflecting current ownership" and, as a result, MedQuest's submission of claims under the former practice information also was not an appropriate basis for an FCA violation.

In this decision, the Sixth Circuit expanded on its recent precedent by stating that the FCA should not be used to penalize providers for technical noncompliance with the complicated Medicare regulatory scheme.