Opinion ID: 31536
Heading Depth: 2
Heading Rank: 3

Heading: Overcharging Theory of Liability

Text: 14 Willard argues that when Humana receives payment at the pre-established capitation rate for healthier enrollees, this rate includes compensation for providing services to those individuals, as well as a premium to offset anticipated costs it expects to incur from providing services to less healthy persons. Willard contends that by not providing services to less healthy persons under its cherrypicking scheme, Humana is effectively overcharging the Government in violation of the FCA. 15 Humana persuasively argues that any alleged discrimination by way of a cherrypicking scheme must occur within the population for which uniform rates have been set. Humana asserts, and Willard agrees, that the rates in this case are determined on a county-by-county basis. Therefore, Willard must allege discrimination based on health status within a single county, not discrepancies in enrollment patterns among different counties, in order to establish that Humana overcharged Medicare. As such, Willard's overcharging theory of liability must fail because Willard has not alleged discrimination based on health status within any particular county, i.e. rate area. 16 As Humana's capitation reimbursement rates were adjusted to each county, the district court properly concluded that Humana accrued no unwarranted benefit and the government no loss by virtue of Humana enrolling more beneficiaries in some counties than others. The district court also properly concluded that it was undisputed that all claims submitted by Humana were valid. Moreover, the district court found that Humana's contract with the government did not obligate it to take affirmative steps to enroll beneficiaries in all counties. Perhaps most importantly, the trial court correctly found: 17 Willard has also failed to state a cause of action under 31 U.S.C. § 3729(a)(2). Under section 3729(a)(2), the plaintiff must identify both a false claim and a false record or statement made or used to get that false claim paid. Thompson [v. Columbia/HCA Healthcare Corp.], 125 F.3d [899] at 903 [5th Cir.1997]. As explained above, Willard has not identified a false claim. Moreover, Willard has not identified any other document or statement used to get an allegedly false claim paid. 18 The False Claims Act does not create liability merely for a health care provider's disregard of Government regulations or improper internal policies unless, as a result of such acts, the provider knowingly asks the Government to pay amounts it does not owe. Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 785 (4th Cir.1999) (The statute attaches liability, not to the underlying fraudulent activity or to the government's wrongful payment, but to the `claim for payment.'... Therefore, a central question in False Claims Act cases is whether the defendant ever presented a `false or fraudulent claim' to the government.) (quoting United States v. Rivera, 55 F.3d 703, 709 (1st Cir.1995)). 19 Because Willard does not allege that any of the claims were false in the sense that they contained false statements or were for services not performed or the like, Willard must resort to either the implied certification or fraud in the inducement theories of liability through which it may be possible to demonstrate that otherwise valid claims are actionable under the FCA. 20