Third Circuit Resurrects FCA Lawsuit In opposition to Hospice Attributable to Disputed Materiality of Eligibility Documentation

A New Jersey hospice supplier should proceed its lengthy struggle in opposition to whistleblowers alleging it violated the False Claims Act (“FCA”) by in search of Medicare reimbursement for sufferers whose documentation didn’t help hospice eligibility. To be eligible for Medicare hospice advantages, a affected person’s doctor should certify the affected person has a life expectancy of six months or much less if the affected person’s sickness runs its regular course, and that certification of terminal sickness should be supported by medical info and different documentation within the medical file. To prevail on an FCA declare, a relator should show that the defendant (1) made a false assertion; (2) with scienter; (3) that was materials; (4) inflicting the federal government to make a cost.

The relators, former staff of defendant Care Options, first filed their grievance below seal in 2008, alleging that Care Options had submitted fraudulent claims to CMS as a result of there was insufficient medical documentation supporting physicians’ certifications of terminal sickness. Based on the relators, the documentation requirement is the cornerstone of the Medicare hospice profit. With out it, there isn’t a approach to make sure that the doctor’s certification is correct and hospice care goes to its supposed beneficiaries. In 2015, the federal government declined to intervene, however the relators opted to proceed.

Throughout discovery, the relators’ medical knowledgeable reviewed 47 affected person information and opined that their documentation didn’t help eligibility in 35% of their hospice certification durations. Primarily based on this, one other of the relators’ consultants calculated that Care Options had improperly charged over $3.6 million to Medicare. Care Options’ medical knowledgeable disagreed, opining {that a} doctor may have fairly decided that the prognosis for every affected person the relators’ knowledgeable reviewed was six months or much less.

After discovery closed, the district courtroom granted Care Options’ movement for abstract judgment. Contemplating the dueling medical consultants’ opinions, it concluded that there was no factual proof that the certifying docs made knowingly false certifications. America Courtroom of Appeals for the Third Circuit reversed, explaining that “FCA falsity merely asks whether or not the declare submitted to the federal government as reimbursable was in actual fact reimbursable, based mostly on the situations for cost set by the federal government.” United States ex rel. Druding v. Care Alts., Inc., 952 F.3d 89, 97 (3d Cir. 2020).

On remand, the district courtroom granted abstract judgment based mostly on lack of materiality and causation. It discovered no proof that Care Options’ insufficiently documented certifications have been materials to the federal government’s choice to pay. The district courtroom reasoned that the federal government by no means refused any of the hospice’s claims regardless of its alleged lacking or insufficient billing documentation. The courtroom additionally famous that the federal government didn’t cease reimbursing Care Options after it was made conscious of the alleged false, inadequately supported doctor certifications.

As soon as once more, the Third Circuit reversed. It discovered that the district courtroom erroneously gave determinative weight to the federal government’s actions whereas overlooking different elements that would help a materiality discovering. Guided by Common Well being Providers, Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016), the Third Circuit examined a number of elements on which “materiality” turns, similar to:

whether or not the federal government has expressly designated the authorized requirement at problem as a “situation of cost”; whether or not the alleged violation is “minor or insubstantial” or as a substitute goes to the “essence of the cut price” between the contractor and the federal government; and whether or not the federal government made continued funds or does so within the “mine run of circumstances,” regardless of “precise information” of the violation.

First, the Third Circuit famous that Medicare laws require satisfactory medical documentation as a situation of cost. It acknowledged that this didn’t, in and of itself, help a discovering of materiality and preclude abstract judgment, but it surely was probative proof of materiality.

Second, the Third Circuit decided that compliance with the documentation requirement was not “minor or insubstantial” however moderately went to “the very essence of the cut price” between the federal government and Care Options. The documentation requirement addresses a foundational a part of the Medicare hospice program and, thus, false certifications merely aren’t minor or insubstantial violations. Additional, there was vital proof within the file that Care Options had longstanding issues with sustaining needed and correct documentation, although Care Options’ management understood the significance of compliance.

Lastly, the Third Circuit faulted the district courtroom’s obvious imputation of precise information of Care Options’ insufficient documentation to the federal government. Medicare laws solely require documentation supporting hospice care to be included in a affected person’s medical information; cost claims needn’t have such info, the courtroom defined. Whereas acknowledging the federal government’s inaction within the 15 years because the realtors’ grievance was filed was proof of immateriality, it was not dispositive. The Third Circuit concluded that the district courtroom had erred in treating this third Escobar issue as determinative of immateriality, and a jury should be permitted to weigh the federal government’s inaction alongside Escobar’s different elements.

The case is United States v. Care Options, No. 22-1035, 2023 WL 5494333 (3d Cir. Aug. 25, 2023).

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