In Graves v. Plaza Medical Centers, Corp., No. 10-23382-CIV (S.D. Fla. Feb. 27, 2017), defendant Humana, Inc. was not able to rely on the extent of its compliance program to refute allegations that it had acted with “reckless disregard” under the federal False Claims Act (FCA). In this qui tam case, the relator alleged that Humana submitted false claims to the Centers for Medicare and Medicaid Services when it certified the accuracy of certain data based on false diagnosis codes from Humana providers, defendants Dr. Cavanaugh and Plaza Medical Centers, Corp. The relator admitted that Humana did not know the codes were false but alleged that Humana nonetheless satisfied the FCA’s “knowledge” requirement by acting with reckless disregard. Federal regulations require Medicare Advantage Organizations, like Humana, to implement effective compliance programs that include measures to detect and prevent fraud such as “upcoding.” On Humana’s motion for summary judgment, the court analyzed the question of scienter based on whether there was evidence that Humana had failed to make a “good faith effort” to make accurate certifications to CMS and to maintain an effective compliance plan. Relator argued that Humana’s compliance program was not reasonably designed or utilized to uncover fraud because it did not provide for proactive fraud detection measures. Rather, relator argued, Humana would investigate fraud only reactively, after someone brought an area of concern to the company’s attention. Humana argued that, even though it had not investigated the fraudulent conduct at issue, there could be no finding that Humana acted with reckless disregard because its compliance program met or exceeded CMS requirements. Humana contended that its compliance program was robust as it included, among other things, an experienced Chief Compliance Officer, policies regarding ethics and fraud, annual ethics training, a fraud reporting hotline, and dedicated investigative resources to investigate allegations of wrongdoing that might surface. The court rejected the argument that the mere existence of a compliance program is sufficient to refute a claim of reckless disregard. Rather, the court relied on evidence of certain shortcomings in the design and application of Humana’s compliance program as raising a genuine fact issue as to whether the program met CMS’s requirements and thus whether Humana acted with “reckless disregard.” Specifically, the Court relied on Humana’s failure to conduct an investigation into the conduct of Dr. Cavanaugh and Plaza Medical Centers despite numerous red flags, including repeated instances where patients’ medical records lacked support for their diagnoses. The court also relied on evidence that Humana neither trained its employees to detect fraud nor instructed them that fraud detection was one of the purposes of reviewing patient records to assess whether diagnoses had adequate support. Accordingly, the court denied Humana’s motion for summary judgment.