Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-05045/USCOURTS-caDC-96-05045-0/pdf.json

Nature of Suit Code: 150
Nature of Suit: Overpayments &amp; Enforcement of Judgments
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 2, 1996 Decided May 2, 1997

No. 96-5045

UNITED STATES OF AMERICA,

APPELLANT/CROSS-APPELLEE

v.

GEORGE O. KRIZEK, M.D., ET AL.,

APPELLEES/CROSS-APPELLANTS

Consolidated with

No. 96-5046

Appeals from the United States District Court 

for the District of Columbia 

(No. 93cv00054)

Mark E. Nagle, Assistant United States Attorney, argued 

the cause for appellant/cross-appellee, with whom Eric H. 

Holder, Jr., United States Attorney, R. Craig Lawrence and 

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Bruce R. Hegyi, Assistant United States Attorneys, were on 

the briefs.

Paul D. Clement argued the cause for appellees/crossappellants, with whom Christopher A. Cole and Paul T. 

Cappuccio were on the briefs.

Before: SILBERMAN, GINSBURG and SENTELLE, Circuit 

Judges.

Opinion for the court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge: This appeal arises from a civil 

suit brought by the government against a psychiatrist and his 

wife under the civil False Claims Act ("FCA"), 31 U.S.C. 

§§ 3729-3731, and under the common law. The District 

Court found defendants liable for knowingly submitting false 

claims and entered judgment against defendants for 

$168,105.39. The government appealed, and the defendants 

filed a cross-appeal. We hold that the District Court erred 

and remand for further proceedings.

I.

The government filed suit against George and Blanka 

Krizek for, inter alia, violations of the civil FCA, 31 U.S.C. 

§§ 3729-3731. Dr. George Krizek is a psychiatrist who practiced medicine in the District of Columbia. His wife, Blanka 

Krizek, worked in Dr. Krizek's practice and maintained his 

billing records. At issue are reimbursement forms submitted 

by the Krizeks to Pennsylvania Blue Shield ("PBS") in connection with Dr. Krizek's treatment of Medicare and Medicaid patients.

The government's complaint alleged that between January 

1986 and March 1992 Dr. Krizek submitted 8,002 false or 

unlawful requests for reimbursement in an amount exceeding 

$245,392. The complaint alleged two different types of false 

claims: first, some of the services provided by Dr. Krizek 

were medically unnecessary; and second, the Krizeks "upcoded" the reimbursement requests, that is billed the governUSCA Case #96-5045 Document #269755 Filed: 05/02/1997 Page 2 of 18
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ment for more extensive treatments than were, in fact, rendered.

A doctor providing services to a Medicare or Medicaid 

recipient submits a claim for reimbursement to a Medicare 

carrier, in this case PBS, on a form known as the "HCFA 

1500." The HCFA 1500 requires the doctor to provide his 

identification number, the patient's information, and a fivedigit code identifying the services for which reimbursement is 

sought. A list of the five-digit codes is contained in the 

American Medical Association's Current Procedures Terminology Manual ("CPT"). For instance, the Manual notes that 

the CPT code "90844" is used to request reimbursement for 

an individual medical psychotherapy session lasting approximately 45 to 50 minutes. The CPT code "90843" indicates 

individual medical psychotherapy for 20 to 30 minutes. An 

HCFA 1500 lists those services provided to a single patient, 

and may include a number of CPT codes when the patient has 

been treated over several days or weeks.

Before the District Court, the government argued that the 

amount of time specified by the CPT for each reimbursement 

code indicates the amount of time spent "face-to-face" with 

the patient. The government focused on the Krizeks' extensive use of the 90844 code. According to the government, 

this code should be used only when the doctor spends 45 to 50 

minutes with the patient, not including time spent on the 

phone in consultation with other doctors or time spent discussing the patient with a nurse. The government argued 

that the Krizeks had used the 90844 code when they should 

have been billing for shorter, less-involved treatments.

Based on its claims of unnecessary treatment and upcoding the government sought an extraordinary $81 million in 

damages. This amount included $245,392 in actual damages 

and civil penalties of $10,000 for each of 8,002 separate CPT 

codes. During a three-week bench trial, the District Court 

determined that the case would initially be tried on the basis 

of seven patients which the government described as representative of the Krizeks' improper coding and treatment 

practices. United States v. Krizek, No. 93-0054 (D.D.C. 

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March 9, 1994) (Protective Order). The determination of 

liability would then "be equally applicable to all other claims." 

Id. On July 19, 1994, the District Court issued a Memorandum Opinion, United States v. Krizek, 859 F. Supp. 5, 8 

(D.D.C. 1994) [hereinafter Krizek I], holding that the government had not established that the Krizeks submitted claims 

for unnecessary services. The Court noted that the government's witness failed to interview the patients or any doctors 

or nurses. Id. The District Court also rejected the government's theory that the Krizeks were liable for requesting 

reimbursement when some of the billed time was spent out of 

the presence of the patient. Id. at 10. The Court found that 

it was common and proper practice among psychiatrists to bill 

for time spent reviewing files, speaking with consulting physicians, etc. Id.

Despite having rejected the government's arguments on 

these claims, the Court determined that the Krizeks knowingly made false claims in violation of the FCA. Id. at 13. The 

Court found that because of a "seriously deficient" system of 

recordkeeping the Krizeks "submitted bills for 45-50 minute 

psychotherapy sessions ... when Dr. Krizek could not have 

spent the requisite time providing services, face-to-face, or 

otherwise." Id. at 11, 12. For instance, on some occasions 

within the seven-patient sample, Dr. Krizek submitted claims 

for over 21 hours of patient treatment within a 24-hour 

period. Id. at 12. The Court stated, "While Dr. Krizek may 

have been a tireless worker, it is difficult for the Court to 

comprehend how he could have spent more than even ten 

hours in a single day serving patients." Id. The Court 

stated that these false statements

were not "mistakes" nor merely negligent conduct. Under the statutory definition of "knowing" conduct the 

Court is compelled to conclude that the defendants acted 

with reckless disregard as to the truth or falsity of the 

submissions. As such, they will be deemed to have 

violated the False Claims Act.

Id. at 13-14.

Having found the Krizeks liable within the seven-patient 

sample, the Court attempted to craft a device for applying the 

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determination of liability to the entire universe of claims. 

Here, the District Court relied on the testimony of a defense 

witness that he could not recall submitting more than twelve 

90844 codesnine hours worth of patient treatmentfor a 

single day. Id. at 12. Based on this testimony, the District 

Court stated that nine hours per day was "a fair and reasonably accurate assessment of the time Dr. Krizek actually 

spent providing patient services." Id. The Court, accordingly, determined that the Krizeks would be liable under the 

FCA on every day in which

claims were submitted in excess of the equivalent of 

twelve (12) 90844 claims (nine patient-treatment hours) in 

a single day and where the defendants cannot establish 

that Dr. Krizek legitimately devoted the claimed amount 

of time to patient care on the day in question.

Id. at 14.

On April 6, 1995, the District Court, with the consent of the 

parties, referred the matter to a Special Master with instructions to investigate the 8,002 challenged CPT codes and, 

applying the nine-hour presumption, to determine 1) the 

single damages owed by the Krizeks; 2) the amount of the 

single damages trebled; 3) the number of false claims submitted by defendants; and 4) the number of false claims multiplied by $5000. United States v. Krizek, No. 93-0054 (D.D.C. 

April 6, 1995) (Order of Reference). After considering evidence submitted by the parties, the Special Master determined that the defendants requested reimbursement for more 

than nine hours per day of patient treatment on 264 days. 

United States v. Krizek, No. 93-0054, at 15 (D.D.C. June 6, 

1995) (Special Master Report). The Special Master found 

single damages of $47,105.39, which when trebled totaled 

$141,316.17. He then determined to treat each of the 1,149 

false code entries as a separate claim, even where several 

codes were entered on the same HCFA 1500. Multiplied by 

$5000 per false claim, this approach produced civil penalties 

of $5,745,000.

After considering motions by the parties, the District Court 

issued a second opinion, United States v. Krizek, 909 F. Supp. 

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32 (D.D.C. 1995) [hereinafter Krizek II], which modified its 

earlier decision. The Court stated that it accepted the Special Master's factual findings, id. at 33, but was applying a 

different approach in calculating damages. First, the Court 

awarded damages of $47,105.38 to the government for unjust 

enrichment based on the nine-hour presumption. Id. at 33. 

The Court then stated:

While the Court set a nine hour benchmark to determine 

which claims were improper, the Court will now set an 

even higher benchmark for classifying claims that fall 

under the False Claims Act so that there can be no 

question as to the falsity of the claims. The Court has 

determined that the False Claims Act has been violated 

where claims have been made totaling in excess of twenty-four hours within a single twenty-four hour period and 

where defendants have provided no explanation for justifying claims made for services rendered virtually around 

the clock.

Id. at 34. Claims in excess of twenty-four hours of patient 

treatment per day had been made eleven times in the six-year 

period. Id. The Court assessed fines of $10,000 for each of 

the eleven false claims, which, combined with single damages 

of $47,105.39, totaled $157,105.39. Id. The Court also assessed Special Master's fees against the Krizeks in the 

amount of $11,000. Id. The government appealed, and the 

Krizeks cross-appealed. We first turn to the government's 

appeal.

II.

The government argues that the District Court's use of a 

twenty-four hour presumption, having earlier announced its 

intent to use nine hours as the benchmark, prejudiced its 

prosecution of the claim. We agree and remand for further 

proceedings.

In Krizek I, the District Court found nine hours to be "a 

fair and reasonably accurate assessment of the time Dr. 

Krizek actually spent providing patient services" and held 

that defendants were presumptively liable for all claims in 

excess of nine hours per day. 859 F. Supp. at 12. Before the 

Special Master, the government relied on this finding by 

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adopting conservative assumptions that favored the Krizeks. 

For instance, the government assumed that a 90843 code, 

indicating a 20 to 30 minute psychotherapy session, would be 

credited as a 20 minute treatment for determining whether 

the Krizeks had over-billed. Likewise, the government treated 90844 claims, which indicate 45 to 50 minute sessions, as 45 

minutes of patient treatment. Considering the large number 

of claims submitted on any given day these assumptions may 

have had a material effect on the damages proved up by the 

government. However, because the damages were likely to 

be substantial already, the government chose not to proffer 

less generous approximations. The government also relied 

on Krizek I by declining to pursue discovery concerning Dr. 

Krizek's private pay patients. Presumably, if the government 

had introduced evidence on these additional patients it could 

have established that the Krizeks billed in excess of twentyfour hours on more days than indicated by Medicare and 

Medicaid records alone.

The District Court announced its intention to abandon the 

nine-hour presumption in favor of a stricter benchmark only 

after receiving the Special Master's Report. While this higher standard may have been permissible, the District Court 

erred in issuing judgment based on the new presumption 

without permitting the parties to introduce additional evidence. We do not hold, as urged by the government, that the 

District Court was prohibited from revisiting its earlier finding and replacing it with the twenty-four hour presumption. 

We hold instead that, even assuming the District Court was 

free to revisit this issue, it could not properly do so without 

allowing the parties to introduce additional evidence.

The government also asserts that the District Court impermissibly disregarded the factual findings of the Special Master in imposing liability for only eleven false claims as opposed to 1,149. We disagree. Under FED. R. CIV. PRO.

53(e)(2) "the court shall accept the master's findings of fact 

unless clearly erroneous." Findings of a special master are 

not to be disturbed unless the court "is left with the definite 

and firm conviction that a mistake has been committed." 

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Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100, 

123 (1969) (internal quotations omitted); see also 9A WRIGHT

& MILLER, CIVIL PRACTICE AND PROCEDURE: CIVIL § 2614, at 699 

(2nd ed. 1995). However, the Special Master's Report did not 

determine, as a matter of fact, that 1,149 false claims had 

been made. His report stated only that, applying the ninehour presumption established by the District Court, 1,149 

claims had been made in excess of the benchmark. As the 

Special Master stated himself, "What I did was try to identify 

the number of claims in excess of nine hours a day, and 

pursuant to the Court's earlier ruling, I called those false 

claims and treated them as false claims." United States v. 

Krizek, No. 93-0054, at 9 (D.D.C. Dec. 15, 1995) (Transcript 

of Hearing). Therefore, the District Court did not reject the 

factual findings of the Special Master, but only afforded to 

those findings a different legal consequence.

III.

The Krizeks cross-appeal on the grounds that the District 

Court erroneously treated each CPT code as a separate 

"claim" for purposes of computing civil penalties. The Krizeks assert that the claim, in this context, is the HCFA 1500 

even when the form contains a number of CPT codes.

The FCA defines "claim" to include

any request or demand, whether under a contract or 

otherwise, for money or property which is made to a 

contractor, grantee, or other recipient if the United 

States Government provides any portion of the money or 

property which is requested or demanded, or if the 

Government will reimburse such contractor, grantee, or 

other recipient for any portion of the money or property 

which is requested or demanded.

31 U.S.C. § 3729(c). Whether a defendant has made one 

false claim or many is a fact-bound inquiry that focuses on the 

specific conduct of the defendant. In United States v. Born

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1 Although Bornstein applied an earlier version of the False 

Claims Act, the definition of "claim" applied by the Court was 

similar to the definition applicable here. See Bornstein, 423 U.S. at 

309 n.4 (stating that a claim is "a demand for money or for some 

transfer of public property") (internal quotations omitted). 

stein, 423 U.S. 303, 307 (1976),1for instance, the Supreme 

Court considered the liability of a subcontractor who delivered 21 boxes of falsely labeled electron tubes to the prime 

contractor in three separate shipments. The prime contractor, in turn, delivered 397 of these tubes to the government 

and billed the government using 35 invoices. The trial court 

awarded 35 statutory forfeitures against the subcontractor, 

one for each invoice. The Court of Appeals reversed, holding 

that there was only one forfeiture because there had been 

only one contract. The Supreme Court disagreed with both 

positions and held that there had been three false claims by 

the subcontractor, one for each shipment of falsely labeled 

tubes. Id. at 313. The Court stated, "[T]he focus in each 

case [must] be upon the specific conduct of the person from 

whom the Government seeks to collect the statutory forfeitures." Id. Because the subcontractor committed three 

separate causative actsdispatching each shipment of the 

falsely marked tubesit would be liable for three separate 

forfeitures. Id.; see also United States ex rel. Marcus v. 

Hess, 317 U.S. 537, 552 (1943) (holding that the government 

was entitled to a forfeiture for each project for which a 

collusive bid was entered even though the bids included 

additional false forms); United States v. Grannis, 172 F.2d 

507, 515 (4th Cir.) (assessing ten forfeitures against defendant 

for each of ten fraudulent vouchers even though the vouchers 

listed 130 items), cert. denied, 337 U.S. 918 (1949).

Bornstein was applied by the United States Court of 

Claims in Miller v. United States, 550 F.2d 17, 24 (Ct.Cl. 

1977), another case considering the FCA liability of a contractor. The contractor in Miller submitted five monthly billings 

to the government in which eleven invoices were enclosed. 

The Court found that there had been five false claims, one for 

each occasion on which the contractor made a request for 

payment. Id. at 23. Similarly, in United States v. Wood

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bury, 359 F.2d 370, 378 (9th Cir. 1966), the Ninth Circuit 

considered what civil penalties attached to ten false applications for payment when the applications included false invoices. Again, the Court imposed ten penalties, one for each 

separate submission, even though the false invoices were used 

to calculate the amount submitted. Id. at 377-78.

The gravamen of these cases is that the focus is on the 

conduct of the defendant. The Courts asks, "With what act 

did the defendant submit his demand or request and how 

many such acts were there?" In this case, the Special Master 

adopted a position that is inconsistent with this approach. 

He stated,

The CPT code, not the HCFA 1500 form, is the source 

used to permit federal authorities to verify and account 

for discrete units of medical service provided, billed and 

paid for. In sum, the government has demanded a 

specific accounting unit to identify and verify the services 

provided, payments requested and amounts paid under 

the Medicare/Medicaid program. The CPT code, not the 

HCFA 1500 form, is that basic accounting unit.

United States v. Krizek, No. 93-0054, at 21 (D.D.C. June 6, 

1995) (Special Master Report). The Special Master concluded that because the government used the CPT code in 

processing the claims, the CPT code, and not the HCFA 1500 

in its entirety, must be the claim. This conclusion, which was 

later adopted by the District Court, misses the point. The 

question turns, not on how the government chooses to process 

the claim, but on how many times the defendants made a 

"request or demand." 31 U.S.C. § 3729(c). In this case, the 

Krizeks made a request or demand every time they submitted 

an HCFA 1500.

Our conclusion that the claim in this context is the HCFA 

1500 form is supported by the structure of the form itself. 

The medical provider is asked to supply, along with the CPT 

codes, the date and place of service, a description of the 

procedures, a diagnosis code, and the charges. The charges 

are then totaled to produce one request or demandline 27 

asks for total charges, line 28 for amount paid, and line 29 for 

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balance due. The CPT codes function in this context as a 

type of invoice used to explain how the defendant computed 

his request or demand.

The government contends that fairness or uniformity concerns support treating each CPT code as a separate claim, 

arguing that "[t]o count woodenly the number of HCFA 1500 

forms submitted by the Krizeks would cede to medical practitioners full authority to control exposure to [FCA] simply by 

structuring their billings in a particular manner." Precisely 

so. It is conduct of the medical practitioner, not the disposition of the claims by the government, that creates FCA 

liability. See Alsco-Harvard Fraud Litigation, 523 F. Supp. 

790, 811 (D.D.C. 1981) (remanding for determination whether 

invoices were presented for payment at one time or individually submitted as separate demands for payment). Moreover, 

even if we considered fairness to be a relevant consideration 

in statutory construction, we would note that the government's definition of claim permitted it to seek an astronomical 

$81 million worth of damages for alleged actual damages of 

$245,392. We therefore remand for recalculation of the civil 

penalty.

The Krizeks also challenge the District Court's definition of 

claim on the ground that the penalties sought in the complaint would violate the Excessive Fines Clause. U.S. CONST. 

amend. VIII. Because we hold that the District Court incorrectly defined claim, we do not find it necessary to reach the 

Krizeks' Excessive Fines argument, in keeping with the 

principle that courts should avoid unnecessarily deciding constitutional questions. See Ashwander v. TVA, 297 U.S. 288, 

345-47 (1936) (Brandeis, J., concurring).

The Krizeks also challenge the District Court's use of a 

seven-patient sample to determine liability. As mentioned, 

the District Court did not consider specific evidence as to the 

truth or falsity of the vast majority of the challenged claims. 

Instead, the District Court determined to go to trial on the 

issue of liability using a sample comprised of cases selected 

by the government. As the Court explained,

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Given the large number of claims, and the acknowledged 

difficulty of determining the "medical necessity" of 8,002 

reimbursement claims, it was decided that this case 

should initially be tried on the basis of seven patients and 

two hundred claims that the government believed to be 

representative of Dr. Krizek's improper coding and treatment practices. It was agreed by the parties that a 

determination of liability on Dr. Krizek's coding practices 

would be equally applicable to all 8,002 claims in the 

complaint.

Krizek I, 859 F. Supp. at 7 (citation omitted). The Krizeks 

assert that the District Court erred in freeing the government of its burden of proving the falsity of each and every 

claim. According to the Krizeks, they did not agree that the 

sample would form the basis of determining liability for the 

entire universe of claims; they agreed to the seven-patient 

sample only as a means of testing the government's theories.

We disagree with the Krizeks' interpretation of the scope of 

their agreement at trial. During a Status Hearing on October 19, 1993, counsel for the Krizeks not only agreed to, but 

proffered, the idea of going to trial based on a representative 

sample. At the hearing, the Court discussed with government counsel whether the Court might make an overall 

determination and then submit the case to a special master. 

Defense counsel stated,

Judge, may I say that we did pick out this population or 

the government finally identified six people. They threw 

in a seventh for purposes of the summary judgment 

motion as their best cases. Why can't we try it on those? 

That is to get 8,336 separate billings for God knows how 

many patients over six years is

Appendix at 140. The Court responded, "You want to try six 

of them, we'll try six of them." Defense counsel answered 

"Yes." Government counsel asked, "The seven that we've 

got, Your Honor?" The Court stated, "Yes, we'll try those 

seven." Id. Understanding that the parties were agreeing 

to go to trial based on the seven representative patients, the 

District Court ordered,

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Having heard argument of the parties, the Court believes 

that it is unnecessary at this time for the Krizeks to 

search for and produce all of their records. The government has identified seven patients and two hundred 

claims for reimbursement that the government believes 

are representative of the Krizeks' improper coding and 

treatment practices. All document production for these 

patients and claims has already occurred. This case will 

go to trial on this issue of liability using these seven 

patients as a representative sample. A determination of 

liability on the issue of improper coding would be equally 

applicable to all other claims. As to the allegations of 

performance of unnecessary services, it may be that 

further discovery will have to take place to establish 

liability for the other patients and claims alleged by the 

government.

United States v. Krizek, No. 93-0054, at 2 (D.D.C. March 9, 

1994) (Protective Order). This order met with no contemporaneous objection by the Krizeks. We conclude, therefore, 

that the Krizeks are bound by their agreement at trial that 

liability would be based on the seven-patient sample with 

damages to be extrapolated later.

Having determined that liability was properly determined 

by the seven-patient sample, we turn now to the question 

whether, in considering the sample, the District Court applied 

the appropriate level of scienter. The FCA imposes liability 

on an individual who "knowingly presents" a "false or fraudulent claim." 31 U.S.C. § 3729(a). A person acts "knowingly" 

if he:

(1) has actual knowledge of the information;

(2) acts in deliberate ignorance of the truth or falsity of 

the information; or

(3) acts in reckless disregard of the truth or falsity of 

the information,

and no proof of specific intent to defraud is required.

31 U.S.C. § 3729(b). The Krizeks assert that the District 

Court impermissibly applied the FCA by permitting an agUSCA Case #96-5045 Document #269755 Filed: 05/02/1997 Page 13 of 18
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gravated form of gross negligence, "gross negligence-plus," to 

satisfy the Act's scienter requirement.

In Saba v. Compagnie Nationale Air France, 78 F.3d 664 

(D.C. Cir. 1996), we considered whether reckless disregard 

was the equivalent of willful misconduct for purposes of the 

Warsaw Convention. We noted that reckless disregard lies 

on a continuum between gross negligence and intentional 

harm. Id. at 668. In some cases, recklessness serves as a 

proxy for forbidden intent. Id. (citing SEC v. Steadman, 967 

F.2d 636, 641 (D.C. Cir. 1992)). Such cases require a showing 

that the defendant engaged in an act known to cause or likely 

to cause the injury. Id. at 669. Use of reckless disregard as 

a substitute for the forbidden intent prevents the defendant 

from "deliberately blind[ing] himself to the consequences of 

his tortious action." Id. at 668. In another category of cases, 

we noted, reckless disregard is "simply a linear extension of 

gross negligence, a palpable failure to meet the appropriate 

standard of care." Id. In Saba, we determined that in the 

context of the Warsaw Convention, a showing of willful 

misconduct might be made by establishing reckless disregard 

such that the subjective intent of the defendant could be 

inferred. Id. at 669.

The question, therefore, is whether "reckless disregard" in 

this context is properly equated with willful misconduct or 

with aggravated gross negligence. In determining that gross 

negligence-plus was sufficient, the District Court cited legislative history equating reckless disregard with gross negligence. A sponsor of the 1986 amendments to the FCA 

stated,

Subsection 3 of Section 3729(c) uses the term "reckless 

disregard of the truth or falsity of the information" which 

is no different than and has the same meaning as a gross 

negligence standard that has been applied in other cases. 

While the Act was not intended to apply to mere negligence, it is intended to apply in situations that could be 

considered gross negligence where the submitted claims 

to the Government are prepared in such a sloppy or 

unsupervised fashion that resulted in overcharges to the 

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Government. The Act is also intended not to permit 

artful defense counsel to require some form of intent as 

an essential ingredient of proof. This section is intended 

to reach the "ostrich-with-his-head-in-the-sand" problem 

where government contractors hide behind the fact they 

were not personally aware that such overcharges may 

have occurred. This is not a new standard but clarifies 

what has always been the standard of knowledge required.

132 Cong. Rec. H9382-03 (daily ed. Oct. 7, 1986) (statement of 

Rep. Berman). While we are not inclined to view isolated 

statements in the legislative history as dispositive, we agree 

with the thrust of this statement that the best reading of the 

Act defines reckless disregard as an extension of gross negligence. Section 3729(b)(2) of the Act provides liability for 

false statements made with deliberate ignorance. If the 

reckless disregard standard of section 3729(b)(3) served 

merely as a substitute for willful misconductto prevent the 

defendant from "deliberately blind[ing] himself to the consequences of his tortious action"section (b)(3) would be redundant since section (b)(2) already covers such struthious conduct. See Kungys v. United States, 485 U.S. 759, 778 (1988) 

(citing the "cardinal rule of statutory interpretation that no 

provision should be construed to be entirely redundant"). 

Moreover, as the statute explicitly states that specific intent 

is not required, it is logical to conclude that reckless disregard in this context is not a "lesser form of intent," see 

Steadman, 967 F.2d at 641-42, but an extreme version of 

ordinary negligence.

We are unpersuaded by the Krizeks' citation to the rule of 

lenity to support their reading of the Act. Even assuming 

that the FCA is penal, the rule of lenity is invoked only when 

the statutory language is ambiguous. Deal v. United States,

508 U.S. 129, 135 (1993). Because we find no ambiguity in 

the statute's scienter requirement, we hold that the rule of 

lenity is inapplicable.

We are also unpersuaded by the Krizeks' argument that 

their conduct did not rise to the level of reckless disregard. 

The District Court cited a number of factors supporting its 

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conclusion: Mrs. Krizek completed the submissions with little 

or no factual basis; she made no effort to establish how much 

time Dr. Krizek spent with any particular patient; and Dr. 

Krizek "failed utterly" to review bills submitted on his behalf. 

Krizek I, 859 F. Supp. at 13. Most tellingly, there were a 

number of days within the seven-patient sample when even 

the shoddiest recordkeeping would have revealed that false 

submissions were being madethose days on which the 

Krizeks' billing approached twenty-four hours in a single day. 

On August 31, 1985, for instance, the Krizeks requested 

reimbursement for patient treatment using the 90844 code 

thirty times and the 90843 code once, indicating patient 

treatment of over 22 hours. Id. at 12. Outside the sevenpatient sample the Krizeks billed for more than twenty-four 

hours in a single day on three separate occasions. Krizek II,

909 F. Supp. at 34. These factors amply support the District 

Court's determination that the Krizeks acted with reckless 

disregard.

Finally, we note that Dr. Krizek is no less liable than his 

wife for these false submissions. As noted, an FCA violation 

may be established without reference to the subjective intent 

of the defendant. Dr. Krizek delegated to his wife authority 

to submit claims on his behalf. In failing "utterly" to review 

the false submissions, he acted with reckless disregard.

We turn finally to the Krizeks' claim that the Special 

Master's fees should be reduced because he "wasted considerable time by utterly failing to adhere to the intent and 

purpose of the Order of Reference and engaging in activities outside the scope of the reference." Brief for 

Appellees/Cross-Appellants at 28. We fail to see how the 

Special Master's time was wasted.

The jurisdiction of a Special Master is dependent on the 

order of reference. See FED. R. CIV. PRO. 53(C). In this case, 

the Order of Reference directed the Special Master to calculate the number of false claims within the parameters established in Krizek I. United States v. Krizek, No. 93-0054 

(D.D.C. April 6, 1995) (Order of Reference). Krizek I stated 

that the Court "will hold the defendants liable under the 

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False Claims Act on those days where claims were submitted 

in excess of the equivalent of twelve (12) 90844 claims (nine 

patient-treatment hours) in a single day and where the defendants cannot establish that Dr. Krizek legitimately devoted 

the claimed amount of time to patient care on the day in 

question." 859 F. Supp. at 14. The Krizeks argue that the 

Special Master wasted time considering rebuttal evidence he 

would eventually reject as "beyond his jurisdiction." The 

evidence the Special Master wasted time considering, according to the Krizeks, was evidence they, themselves, proferred. 

Before the Special Master, the Krizeks did not present specific proof that Dr. Krizek had, in fact, provided the claimed 

amount of patient-treatment time. The only rebuttal evidence they provided attacked the merits of the nine-hour 

presumption. In response, the Special Master correctly determined that he lacked authority to reconsider the District 

Court's opinion. We reject the Krizeks' contention that a 

litigant should not be billed for time spent considering irrelevant evidence when the evidence was presented by the complaining party.

The Krizeks also argue that the Special Master wasted 

time researching the definition of the term "claim." We do 

not understand how the Special Master could have determined the number of false claims, as directed, without researching the question of what constitutes a "claim."

Finally, the Krizeks object that some of the Special Master's functions were referred to a paralegal. However, the 

Order of Reference specifically instructed the Special Master 

to delegate tasks to legal assistants where "efficient and 

economical." As a result, we affirm the award of fees to the 

Special Master.

IV.

We, therefore, conclude that the District Court erred in 

replacing the nine-hour presumption with a twenty-four hour 

benchmark without providing an opportunity for the litigants 

to present additional evidence. We also hold that the "claim" 

in this context is the HCFA 1500 form. We hold that crossUSCA Case #96-5045 Document #269755 Filed: 05/02/1997 Page 17 of 18
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appellants are bound by their stipulation that liability would 

be determined by the seven-patient sample. In considering 

this sample the District Court properly interpreted "reckless 

disregard" to be a linear extension of gross negligence, or 

"gross negligence-plus." Finally, we affirm the award of fees 

to the Special Master. We remand to the District Court for 

further proceedings consistent with this opinion.

So ordered.

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