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Evercare Hospice Must Answer False Claims Act Fraud Charges

Last week a federal judge in ruled in United States ex rel. Fowler v. EverCare Hospice, Inc., Civil Action No. 11-cv-00642-PAB-NYW, 15 (D. Colo. Sep. 21, 2015) that a case brought against United HealthCare entities Evercare Hospice, Inc., Ovations, Inc. and OptumHealth Holdings, LLC, may continue. This is another in a string of hospice fraud cases under the false claims act the government and/or relators are pursuing or have settled. In so ruling, the court rejected two arguments often made by defendants in False Claims Act health care fraud cases.

Court Rules On Materiality of Hospice Regulations to Hospice Fraud under the False Claims Act

Evercare argued that its failure to maintain adequate patient records, even if fraudulent was not material under the False Claims Act.  In response, the court found maintaining adequate patient records material to the government’s decision to pay claims.  Thus, it qualifies as a condition of payment for hospice care claims under Medicare (at 15-18).  The defense had argued that requirements deemed “conditions of participation” could lead only to exclusion from the program.  Requirements cannot give rise to FCA liability unless deemed a “condition of payment”. Conditions of payment permit the government to withhold payment.

After examining the relevant Medicare statutory and regulatory language, the court rejected this argument.

This issue is a hot one in FCA health care fraud cases.

Some courts have fallen into this trap of looking to the condition of payment/participation dichotomy.  They do so by focusing solely on the regulatory language to the exclusion of the purpose. We suggest the proper construct for evaluating this issue is the one articulated by the United States Court of Appeals for the First Circuit last spring when it reversed the district court’s opinion in United States ex rel. Escobar v. Universal Health Services, Inc.,  No. 14-1423 (1st Cir. March 17, 2015) This construct puts the focus on the purpose of the requirement, i.e., is it “material” in that it may influence the government’s decision to pay the claim.

Court Grapples with Relevance of Physician Certification

Second, the court considered the physician’s certification of Medicare eligibility for the service being billed.  It concluded that certifications can be false even when expressions of opinion, scientific judgment or a statement or conclusion about which reasonable minds could differ (at 19-22). The corporate defendant who submitted the claims argued that the physician certification shielded it from liability. Key to the court’s decision was that

the government’s complaint contains extensive allegations that suggest that the information on which the physicians relied (which consisted of oral reports from nurses who evaluated the patients) was not reliable and therefore precluded those physicians’ legitimate exercise of clinical judgment.  (at 20)

The court cited favorably to another hospice case in which the court found that

“’physicians could not legitimately exercise their medical judgment because defendants provided false information on which the physicians relied.’ United States ex rel. Landis v. Hospice Care of Kansas, LLC, 2010 WL 5067614, at *4 (D. Kan. 2010).” (at 19)

Like the issue above, doctor certifications can be an as an absolute bar to a company’s FCA liability.  Therefore it is frequently invoked by FCA defendants. We are glad to see another court realize that a doctor’s opinion is only as good as the information it is based on.

Now the defendants will have to answer the complaint and the case will proceed to discovery. It will be interesting to see how the hospice fraud case progresses and if the False Claims Act allegations settle. In the meantime, the strong opinion will help the government and relators in other hospice and health care fraud false claims act cases.

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