Opinion ID: 2746816
Heading Depth: 2
Heading Rank: 1

Heading: Nature of Mastej’s FCA Case

Text: The key allegations in Mastej’s complaint are that (1) the Defendants made payments to ten identified doctors to induce them to refer, or reward them for referring, patients for treatment at the Defendants’ Medical Center; (2) the ten doctors referred patients, and the Defendants treated them; (3) the Defendants submitted interim claim forms and annual hospital cost reports to Medicare requesting payment for those referred patients’ treatment; (4) Medicare paid for 26 Case: 13-11859 Date Filed: 10/30/2014 Page: 27 of 41 treatment of patients referred by the ten doctors; and (5) the Defendants falsely certified in the annual hospital cost reports that the Defendants had complied with all applicable laws. 18 As to Counts I and II, Mastej’s FCA theory is that the Defendants’ Medicare interim claims and hospital cost reports, taken together, were false because (1) the Defendants were not legally permitted to seek any Medicare reimbursement at all for any of those referred patients due to the Stark and Anti-kickback violations; (2) the annual hospital cost reports totaled the amounts due for all interim claims made by the hospital for that year, and thus total amounts shown in each cost report necessarily included the amounts received for the referred patients; and (3) the hospital cost reports falsely certified that the medical services for the year were provided in compliance with the applicable health care laws. See Walker, 433 F.3d at 1356; McNutt ex rel. United States v. Haleyville Medical Supplies, Inc., 423 F.3d 1256, 1259 (11th Cir. 2005). 19 B. Particularized Allegations of Financial Incentives for Doctors 18 At this juncture, Mastej does not dispute that the Defendants’ interim claim forms accurately described medical services needed, rendered, and properly priced. 19 Given that this case involves an express certification of compliance in the hospital cost reports, we need not and do not express any opinion on the required elements of any “implied certification” theory in FCA cases. 27 Case: 13-11859 Date Filed: 10/30/2014 Page: 28 of 41 Mastej’s complaint identifies the financial incentive schemes in great detail. He gives the names of the doctors who received the incentives, the names of the Defendants’ employees who negotiated the incentives with the doctors, precisely what the incentives were, when they were provided, why they were provided, and why they were illegal. Mastej’s complaint provides specific details about the “oncall” neurosurgeon scheme the Defendants utilized to induce six doctors to refer Medicare patients for treatment at the Defendants’ hospital. It offers specific information about the golf-trip benefit provided to four additional doctors in 2008. Mastej’s complaint identifies the names of all ten doctors who allegedly referred patients after having received these financial benefits from the Defendants. Mastej’s allegations regarding the financial incentives, which he claims violated the Stark and Anti-kickback statutes, meet Rule 9(b)’s required level of specificity. See Hopper, 588 F.3d at 1324 (holding that specific details about time, place, and substance of the fraud satisfy Rule 9(b)). But healthcare providers do not violate the FCA simply by having a financial relationship with a doctor. Merely alleging a violation of the Stark and Anti-kickback statutes does not sufficiently state a claim under the FCA. It is the submission and payment of a false Medicare claim and false certification of compliance with the law that creates FCA liability. And the Defendants’ interim 28 Case: 13-11859 Date Filed: 10/30/2014 Page: 29 of 41 claims were not false unless those claims submitted or presented were for Medicare patients who had been (1) referred by one of the ten doctors and (2) treated by the Defendants. Stated another way, the Defendants’ claims had to be for a specific type of Medicare patient, or a “patient-specific” referral, in order to be false. And the certifications in the annual hospital cost reports were not false unless the Defendants had already submitted false interim claims for this type of referred patient. Therefore, we examine what the complaint says about referred patients and whether the complaint sufficiently alleges submission and payment of interim claims for treatment of patients who were referred by the ten doctors or one of them. 20 See, e.g., Clausen, 290 F.3d at 1312 n.21 (“We cannot make assumptions about a False Claims Act defendant’s submission of actual claims to the Government without stripping all meaning from Rule 9(b)’s requirement of 20 As noted above, Mastej’s “presentment” claim in Count I requires proof that the Defendants submitted claims to the government, but it does not require proof that the government paid such claims. Mastej’s “make or use” claim in Count II, as alleged in Mastej’s complaint under the pre-2009 version of the FCA, requires proof that the government actually paid claims. See Hopper, 588 F.3d at 1327. We address submission and payment together because, in this case, our Rule 9(b) analysis is the same for both. We also note that Count III has different elements of proof, including concealment or avoidance of an obligation to repay the government. At this preliminary juncture in the case, our disposition of Count III is unaffected by this difference. Unless Mastej sufficiently pleads submission and payment claims in Counts I and II, his Count III fails because it is based on false claims having been paid that Defendants failed to repay. Thus, our discussion focuses on Counts I and II. 29 Case: 13-11859 Date Filed: 10/30/2014 Page: 30 of 41 specificity . . . .”). And Hopper reiterated that “[i]mproper practices standing alone are insufficient to state a claim under either § 3729(a)(1) or (a)(2) absent allegations that a specific fraudulent claim was in fact submitted to the government.” 588 F.3d at 1328. C. Referred Patients The complaint summarily states that the doctors receiving the financial incentives referred patients, and that the Defendants submitted claims and were paid by Medicare for treating the referred patients. The complaint, however, does not provide the date or amount of any claim that was submitted for a referred patient or was paid for a referred patient. Put differently, the complaint does not identify an actual representative interim claim or identify a single Medicare claim that was for a patient referred by any one of the ten doctors. The complaint also does not provide any specifics regarding (1) the dates or frequency with which the ten doctors, or any one of them, referred patients; (2) the dates or frequency with which the Defendants treated such referred patients; or (3) the dates, frequency, or amounts of any actual interim claims for such referred patients submitted by the Defendants and paid by Medicare. There is even no allegation of the number of referred patients (whether per week, per month, or per year); the number or amounts of claims for referred patients; or the amount of 30 Case: 13-11859 Date Filed: 10/30/2014 Page: 31 of 41 payments received for referred patients. Through four versions of the complaint, Mastej never pleaded any details as to the referred patients, or any specifics as to any interim claim submissions or payments for the referred patients. At bottom, the complaint does not specify a single claim for a single referred patient by a single one of the ten doctors and thus does not sufficiently allege any actual false claim. We would end our analysis here but for the fact that such detailed information about a representative claim is not the only way a relator can establish “some indicia of reliability . . . to support the allegation of an actual false claim for payment being made to the Government.” See Clausen, 290 F.3d at 1311; see also id. at 1312 & n.21; Durham, 847 F.2d at 1512. A relator can also provide the required indicia of reliability by showing that he personally was in a position to know that actual false claims were submitted to the government and had a factual basis for his alleged personal knowledge. See Walker, 433 F.3d at 1360; see also Hopper, 588 F.3d at 1326 (indicating that a relator may satisfy Rule 9(b) by alleging “personal knowledge of the defendants’ billing practices that g[i]ve[s] rise to a well-founded belief that the defendant submitted actual false or fraudulent claims”). 31 Case: 13-11859 Date Filed: 10/30/2014 Page: 32 of 41 Accordingly, we must also examine whether any other allegations in Mastej’s complaint provide the required indicia of reliability to support his general statements that the Defendants treated patients referred by the ten doctors, submitted Medicare claims for those referred patients, and were paid for them. D. Other Indicia of Reliability Rather than submit examples or a representative false interim claim, Mastej’s complaint focuses on his personal knowledge gained in his roles and duties as Vice President of Defendant HMA for six years until February 2007 and as CEO of the Collier Boulevard campus from February 2007 until October 2007. Mastej states that his personal “knowledge of Defendants’ practices and actions [was] gained by his own efforts as an employee of Defendants and their affiliates, including serving as Chief Executive Officer for a hospital owned by [Defendant] Naples HMA.” As noted above, as Vice President of Defendant HMA, Mastej alleges that he “often attended case management meetings” in which Medicare patients and billing were discussed and that “every patient was reviewed, including how the services were being billed to each patient.” As a result, as Vice President of Defendant HMA, Mastej was “intimately familiar with the payor mix at the hospitals,” and the Medicare billing and payments at the hospitals, which included 32 Case: 13-11859 Date Filed: 10/30/2014 Page: 33 of 41 both Pine Ridge and Collier Boulevard. Then as Collier Boulevard’s CEO between February and October of 2007, Mastej negotiated contracts for on-call coverage. Mastej alleges that as Vice President and CEO, he was familiar with the “services offered by Collier Boulevard and Pine Ridge,” their patients, and the revenue generated by the services. Further, Mastej alleges that the Pine Ridge CEO, Geoff Moebius, contacted Mastej as Collier Boulevard’s CEO and asked him to split the cost of the on-call coverage in exchange for Medicare/Medicaid referrals. Mastej claims he rejected the offer but uses that call as part of the underlying factual basis for showing his personal knowledge of the submission of false claims for referred patients at Pine Ridge. And Mastej worked for over six years with the Defendants’ corporate organization, albeit in different roles. Whether a complaint alleges sufficient indications of reliability that actual claims were submitted is performed on a case-by-case basis. Atkins, 470 F.3d at 1358. Taking all of these and other above allegations in the complaint together, we conclude Mastej’s complaint contains sufficient indicia of reliability for his personal knowledge that the Defendants actually submitted interim claims to Medicare for patients referred to the Medical Center as part of the on-call incentive scheme during 2007. 33 Case: 13-11859 Date Filed: 10/30/2014 Page: 34 of 41 Importantly here, during 2007 Mastej was not a corporate outsider who only speculated that the Defendants must have submitted or paid claims to the government. See Clausen, 290 F.3d at 1310-12, 1314. He did not base his knowledge on rumors or mere conjecture. See Atkins, 470 F.3d at 1359; Sanchez, 596 F.3d at 1303 n.4. To the contrary, during 2007 Mastej was a Vice President of Defendant HMA (which oversaw both Pine Ridge and Collier Boulevard) and then CEO of one of those hospitals. As Vice President, he had direct information about both Pine Ridge and Collier Boulevard’s billings, revenues and payor mix, and he was in the very meetings where Medicare patients and the submission of claims to Medicare were discussed. See Walker, 433 F.3d at 1360 (noting that allegations of personal knowledge resulting from employment with the defendants and discussions with the office manager about the submission of claims provided a basis for the relator’s knowledge). As CEO of Collier Boulevard, he alleges that he continued to be familiar with the Defendants’ Medicare patients, services and, importantly, revenues. At this preliminary stage, Mastej has sufficiently articulated how he allegedly gained his direct, first-hand knowledge of the Defendants’ submission of false interim claims to the government and the government’s payment of such claims. See Atkins, 470 F.3d at 1359. 34 Case: 13-11859 Date Filed: 10/30/2014 Page: 35 of 41 Critical to this conclusion is also the fact that the type of fraud alleged here does not depend as much on the particularized medical or billing content of any given claim form. In other FCA cases, the allegation is that a defendant’s Medicare claim contained a false statement because the claim sought reimbursement for particular medical services never rendered to the patient, see Atkins, 470 F.3d at 1354; Corsello, 428 F.3d at 1011; Sanchez, 596 F.3d at 1302; or for medical services that were unnecessary, overcharged, or miscoded, see Clausen, 290 F.3d at 1302; Corsello, 428 F.3d at 1011; Atkins, 470 F.3d at 1354; or for improper prescriptions, see Hopper, 588 F.3d at 1322; or for services not covered by Medicare, see Sanchez, 596 F.3d at 1302 & n.2. In those types of cases, representative claims with particularized medical and billing content matter more, because the falsity of the claim depends largely on the details contained within the claim form—such as the type of medical services rendered, the billing code or codes used on the claim form, and what amount was charged on the claim form for the medical services. This case, however, turns on the Defendants’ submitting interim claims to the government for referred Medicare patients after having engaged in an incentive-for-referral scheme and then falsely certifying at year-end that they have complied with the applicable healthcare laws. The name of the patient is needed to 35 Case: 13-11859 Date Filed: 10/30/2014 Page: 36 of 41 ascertain if the patient was one referred by one of the ten doctors. But the type of medical service rendered and described in that interim claim, the billing code, or what was charged for that service are not the underlying fraudulent acts. In other words, the claim-falsity in this case does not turn on those usual types of medicalclaim details. A plaintiff must satisfy Rule 9(b) with respect to the circumstances of the fraud he alleges—but not as to matters that have no relevance to the fraudulent acts. And during 2007, Mastej was actively and heavily engaged in the Defendants’ business and revenue operations, as outlined above. For these reasons, considered cumulatively, we conclude that Mastej’s complaint contains sufficient indicia of reliability for Mastej’s allegations that during 2007 the Defendants had an incentive-for-referral scheme with six neurosurgeons, actually submitted false interim claims to Medicare for such referred patients, and were paid. These allegations accordingly satisfy Rule 9(b)’s particularity requirement as to claims during 2007. E. 2008 and 2009 Calendar Years On the other hand, we find that Mastej’s complaint does not satisfy Rule 9(b) with respect to his allegation that the Defendants sought and received reimbursement from Medicare for patients referred in the two alleged incentive schemes after Mastej ended his employment with the Defendants in October 2007. 36 Case: 13-11859 Date Filed: 10/30/2014 Page: 37 of 41 As noted above, Mastej’s complaint alleges the submission and payment of such interim claims only in a generalized and conclusory manner. Standing alone, these general allegations do not satisfy Rule 9(b)’s particularity requirement. See Clausen, 290 F.3d at 1311. Mastej’s complaint does not offer any other indicia of reliability for his assertion that interim claims for referred patients were actually submitted and paid after he left his job. After his employment ended, Mastej was no longer privy to information about the Defendants’ business practices, Medicare patients, referrals of patients, the billing of services to Medicare, or revenue from Medicare reimbursements. The indicia of reliability that existed while Mastej served as Vice President and then CEO disappeared when he left the Defendants’ employment in October 2007. 21 To be sure, we do not suggest, much less hold, that a qui tam plaintiff-relator can never base his case on false claims submitted after he left a defendant’s employ. Instead, we conclude only that under the particular context of this case, Mastej has not provided the required indicia of reliability for his general allegation 21 As noted in footnote 1, after dismissal of his complaint, Mastej filed an affidavit attempting to clarify and add certain matters. In that affidavit, Mastej stated that as CEO of Collier Boulevard, he reviewed electronically-generated census reports on a daily basis and those reports include the names of the patients, the names of their admitting physicians, and identification of the payor (i.e., Medicare, Medicaid, commercial insurance, or self pay). While we do not rely on this post-dismissal affidavit, it illustrates the access to information that he had as CEO but no longer had after October 2007. 37 Case: 13-11859 Date Filed: 10/30/2014 Page: 38 of 41 that the Defendants submitted false claims for referred patients to the government after Mastej stopped working for the Defendants. That is so because the reliability of Mastej’s general allegation derives from his highly significant employment roles and duties during 2007. Mastej alleges he was not only in a position to know but also gained access to the relevant information during his employment. Removed from this vantage point and from his access to critical billing and revenue information, Mastej has articulated no factual basis for his assertion that the particular doctors continued to refer patients or that the Defendants submitted interim claims for such patients after Mastej left—other than speculation that claims “must have been submitted, were likely submitted or should have been submitted to the Government.” Clausen, 290 F.3d at 1311. That is not enough. 22 In sum, as to Counts I and II, we conclude that Mastej’s complaint satisfies Rule 9(b)’s particularity requirement only with respect to 2007 interim claims submitted to and paid by the government before Mastej ended his employment in October 2007. Because the 2007 hospital cost report necessarily encompassed those interim claims, Mastej’s knowledge about the 2007 interim claims is 22 The Defendants’ Stark log, which is referenced in Mastej’s complaint, does not help Mastej with respect to his assertion that Defendants sought and received reimbursement for Medicare patients referred through the incentive scheme after Mastej left the Defendants’ employ in October 2007. The Stark log, at best, identifies doctors who made referrals after 38 Case: 13-11859 Date Filed: 10/30/2014 Page: 39 of 41 sufficient indicia of reliability as to the 2007 hospital cost report. 23 However, the complaint fails to satisfy Rule 9(b) for interim claims submitted to and paid by the government thereafter and for the hospital cost reports dependent on them. F. Mastej’s Argument Based on the 2009 Amendment We recognize that Mastej contends that this case is subject to the new 2009 version of the FCA and that the 2009 amendment affects Mastej’s “make or use” claim in Count II. Before the amendment, a “make or use” violation occurred when a person “knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government.” 31 U.S.C. § 3729(a)(2) (1994). After the 2009 amendment, a “make-or-use” violation occurs when a person “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(B) (2009). ——————————– having received a financial incentive. It does not indicate whether the Defendants actually submitted claims for these referred patients, much less that Medicare paid such claims. 23 On Count I (the “presentment” violation), Mastej can proceed as to interim claims submitted to the government before October 2007 and as to the 2007 hospital cost report to that extent. On Count II (the “make-or-use” violation), Mastej can proceed as to interim claims that the government paid before October 2007 and as to the 2007 hospital cost report to that extent. While Count III (the “reverse-false-claim” violation) has different elements, see supra footnote 20, the Defendants challenged Count III on only the same grounds they challenged Count II. Accordingly, for purposes of the limited Rule 9(b) issue in this appeal, our Count II analysis applies equally to Count III. 39 Case: 13-11859 Date Filed: 10/30/2014 Page: 40 of 41 Based on the change in the statutory language, Mastej asserts that he need not plead or prove that the government paid any claim to establish a “make-or-use” violation in Count II. In Hopper, this Court held that “payment” was an element of a “make-or-use” violation before the 2009 Amendment, see 588 F.3d at 1327, but we left open the question whether “payment” is still an element after the amendment, see id. at 1329 n.4. We need not answer this question in this case either. Mastej’s complaint cited only the old version of the statute. Indeed, his “make-or-use” claim in Count II parroted the language of the old version. Mastej amended his complaint three times—but he never mentioned the new version of the statute in any of the four iterations of his complaint. Instead, he repeated his allegations based on the old version of the statute. The Defendants were thereby put on notice that the old version applies to Mastej’s complaint and that “payment” would be an element of Count II. It is too late for Mastej to switch horses now. But even if we applied the new version to Mastej’s Count II, our decision today would be the same. At a minimum, the new version requires Mastej to show that the Defendants made “a false record or statement” that was “material to a false or fraudulent claim.” 31 U.S.C. § 3729(a)(1)(B) (2009). As we outlined above, Mastej has sufficiently alleged that the Defendants submitted false interim claims 40 Case: 13-11859 Date Filed: 10/30/2014 Page: 41 of 41 during his 2007 tenure as Vice President and then CEO and that the 2007 hospital cost report necessarily included these claims and thus falsely certified that the medical services provided complied with the applicable laws. However, Mastej’s complaint does not allege with sufficient particularity that the Defendants made any false statement (much less one that was material to a false claim) thereafter.