Bringing a False Claims Act Case Without Identifying Specific Claims to the Government

We wrote earlier about the important holding in one of this Firm’s cases, U.S. ex rel. Groat v. Boston Heart Diagnostics Corp., 2017 WL 2533341 (D.D.C. June 9, 2017), regarding the responsibility of a medical laboratory to ascertain whether lab tests ordered by physicians are medically necessary. That opinion also includes helpful language regarding the degree of specificity and particularization of actual claims required under the False Claims Act (“FCA”).

Allegations of Unnecessary Lab Tests

The case arose when a medical doctor employed at a health insurance company filed a FCA action against a clinical laboratory alleging that the defendant engaged in a systematic scheme to bill Medicare for medically unnecessary tests and to falsely certify that the tests were necessary.  Among multiple other challenges, defendant argued that the case should be dismissed because relator had not alleged her claims with specificity and had not identified even one actual false claim that was submitted to the government.

Defendant, Boston Heart, is a clinical laboratory that provides diagnostic testing related to cardiovascular health.  Relator alleged that Boston Heart conducts laboratory tests that are ordered by doctors and other healthcare providers. More significantly, Relator alleged that Boston Heart facilitated and encouraged the ordering of unnecessary tests by providing doctors with pre-printed test requisition forms that group certain tests together in test panels, allowing the doctor to easily order multiple tests at once simply by checking one box on the form.

According to Relator, a range of genetic and non-genetic tests performed by Boston Heart are not necessary for patients with certain identified diagnostic codes, and therefore should not be performed on those patients. The specific tests at issue were identified in detail in the Complaint.

Screening Tests Must Be Supported by Relevant Diagnostic Codes

As the court summarized the allegations,

“the relator alleges: when any of these four [] diagnostic codes are given to a patient in the absence of other diagnostic codes, the tests set forth above are … known to be medically unnecessary because they (1) do not and cannot predict the patient’s risk of future heart disease, (2) do not and cannot screen for any currently existing heart disease in the patient, and (3) provide no additional information regarding the cardiovascular-related diagnoses sometimes used to justify these tests, such as hypertension, hyperlipidemia, or malaise and fatigue, and ( 4) have no bearing on any potential treatments for those diagnoses.”

Id. at *4-5.

The relator’s allegations that the tests were not medically necessary rested, in part, on national guidelines for dealing with cardiovascular risk in adults without symptoms and on local and national coverage determinations issued by Medicare and its contractors. Those authorities did not support using the challenged testing for mere screening purposes on patients without diagnoses that supported those tests. Id. at *5.

Allegations That Claims for Lab Tests Were Submitted to Insurance Company Can Support Inference That Claims Were Submitted to Government Healthcare Programs

The court found that the relator satisfied Rule 9(b) by supporting her allegations with representative claims for payment that the defendant submitted to her employer, explaining that the relator was not required to provide claims actually submitted to the government.  The court also held that Relator did not need to identify specific individuals involved because she alleged a top-down, company-wide scheme.  The Complaint was found to allege material false claims with sufficient specificity and an acceptable inference that false claims were actually submitted to the government based on the relator’s analysis of the type and volume of testing performed on thousands of patients by hundreds of laboratories that billed to her employer.  Id. at * 9-10.

The court concluded that “the relator ‘corroborated’ her allegation that Boston Heart submitted claims to the government by providing a ‘concrete example’ of a portion of the representative claims submitted to United for Medicare and Medicaid patients….  Accordingly, the relator sufficiently pleaded that Boston Heart submitted claims to the government for payment…. The Court [also] agrees with the relator that because she has sufficiently ‘alleged that Boston Heart was in the business of conducting laboratory tests on patients with all types of health insurance and earned revenue by being paid by those health insurers for the tests in conducted,’ … the Court ‘must grant [the relator] the benefit of [the] reasonable inference,’ … [that] Boston Heart also submitted claims to TRICARE and the Veterans Administration.”  Id. at *11 & n. 6.

Cases Can Proceed Where Specific Claims to the Government Are Not Known in Advance

This case falls within an ever-expanding body of case law that holds that even the specificity required under FRCP 9(b) and the presentment requirement under the FCA can be satisfied without identifying particular false claims to the government.  See, e.g., United States ex rel. Prather v. Brookdale Senior Living Communities, 838 F.3d 750 (6th Cir. 2016)(requirement that a relator identify an actual false claim may be relaxed in circumstances where the relator pleads facts supporting a strong inference that the claim was submitted); United States ex rel. Presser v. Acacia Mental Health Clinic, LLC, 836 F.3d 770 (7th Cir. 2016) (in case involving claims of medically unnecessary billing, allegations the defendant had patients on Medicare was enough to draw a reasonable inference that Medicare was billed for these services); United States ex rel. Heath v. AT & T, Inc., 791 F.3d 112, 123 (D.C. Cir. 2015)(relator not required to plead representative claims actually submitted to the government in part because that would impose a higher pleading standard than what would need to be proved at trial); U.S. ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451 (4th Cir. 2013), cert. denied, No. 12-1349, 2014 WL 1271321 (Mar. 31, 2014).

Since healthcare whistleblowers often work in the clinical or marketing areas of a company, they frequently won’t have access to actual billing records.  Recognizing common sense inferences that claims must have been submitted to government payors is a critical step for allowing legitimate cases to proceed past a motion to dismiss.