Court Opinion

ID: 178314
Source: CourtListenerOpinion
Date Created: 2010-10-29 00:03:48+00
Date Added: 2024-06-11T17:25:44.436519
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              OCT 28 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                           FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 09-16477

              Plaintiff - Appellee,              D.C. No. 2:04-cv-00859-PMP

  v.
                                                 MEMORANDUM *
EUGENE CHEN, M.D.,

              Defendant - Appellant.

                    Appeal from the United States District Court
                             for the District of Nevada
                      Philip M. Pro, District Judge, Presiding

                      Argued and Submitted October 6, 2010
                            San Francisco, California

Before: BEEZER, KLEINFELD, and GRABER, Circuit Judges.

       Dr. Eugene Chen appeals the district court’s final judgment against him.

Judgment was entered after a jury found that Dr. Chen knowingly submitted 3,544

false claims to Medicare. Dr. Chen asserts that the evidence presented at trial was

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
insufficient to prove the government’s case. Because we conclude that substantial

evidence supports the jury’s verdict against Dr. Chen, we affirm the judgment.

      A jury verdict must be upheld if supported by “substantial evidence.” See

Harper v. City of Los Angeles, 533 F.3d 1010, 1021 (9th Cir. 2008). Substantial

evidence is evidence adequate to support the jury’s conclusion even if it is possible

to draw a contrary conclusion from the same evidence. See id. When reviewing a

jury’s verdict, we must “view all evidence in the light most favorable to the

nonmoving party, draw all reasonable inferences in the favor of the non-mover,

and disregard all evidence favorable to the moving party that the jury is not

required to believe.” Id. The credibility of the witnesses and the weight of the

evidence are issues for the jury and are generally not subject to appellate review.

See Watec Co. v. Liu, 403 F.3d 645, 651 n.5 (9th Cir. 2005).

      The facts of this case are known to the parties, so we do not repeat them.

      Under the False Claims Act (“FCA”), “any person who . . . knowingly

presents, or causes to be presented, a false or fraudulent claim for payment or

approval” is liable to the U.S. Government. 31 U.S.C. § 3729(a)(1). The plaintiff

must prove all elements of an FCA claim by a preponderance of the evidence. Id.

§ 3731(d).

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                                          I

      Dr. Chen asserts that he provided a separately identifiable consultation in

each case where he billed a consultation code, and therefore he was entitled to

payment. He states that the treating physicians requested, and he provided,

consultations that went above and beyond the routine procedure. But the requests

of treating physicians, Dr. Chen's notes, and the testimony of the government’s

witnesses support the finding that separate consultations were neither requested nor

performed. Even if defense evidence suggests otherwise, the jury was entitled to

weigh the evidence and determine the credibility of witnesses. See Watec, 403

F.3d at 651 n.5.

      Dr. Chen attempts to discredit the government's case by asserting that the

government relied entirely on paperwork and expert testimony and presented no

evidence of what he actually did. But documents such as referral requests and

consultation reports are relevant evidence of the services that were requested and

performed. Further, Dr. Chen himself described the services he provided. The jury

could have concluded that Dr. Chen submitted false claims simply by comparing

Dr. Chen’s own testimony with Medicare regulations, Current Procedural

Terminology Manual (“CPT Manual”) definitions, and descriptions provided by

government witnesses.

                                          3
                                            II

       Dr. Chen asserts that even if his claims were false, he did not know that they

were false. Under the FCA, a person “knowingly” submits false information if he

or she “(i) has actual knowledge of the information; (ii) acts in deliberate ignorance

of the truth or falsity of the information; or (iii) acts in reckless disregard of the

truth or falsity of the information.” 31 U.S.C. § 3729(b)(1)(A). Although a

defendant cannot be held liable for an “[i]nnocent mistake” or “mere negligence,”

U.S. ex rel. Hagood v. Sonoma Cnty. Water Agency, 929 F.2d 1416, 1421 (9th Cir.

1991), “no proof of specific intent to defraud” is required, 31 U.S.C. §

3729(b)(1)(B). As this court has previously noted, “what constitutes the offense is

not intent to deceive” but rather “the knowing presentation of what is known to be

false.” Hagood, 929 F.2d at 1421.

       Substantial evidence supports the jury's finding that Dr. Chen knowingly

submitted false claims. The government produced evidence that Dr. Chen knew

Medicare’s billing limitations on consultations or acted in reckless disregard or

deliberate ignorance of the Medicare billing regulations. Medicare providers have

a duty to familiarize themselves with billing requirements. See Heckler v. Cmty.

Health Servs., 467 U.S. 51, 64 (1984). Medicare also sent several pamphlets and

                                             4
newsletters that collectively explained the requirements for a “consultation” and

the proper use of the modifiers and codes used by Dr. Chen.

      The jury might also have inferred Dr. Chen’s knowledge from circumstantial

evidence. For example, Dr. Chen routinely used the highest-paying consultation

code. After he was sued, Dr. Chen changed his paperwork but continued to bill a

consultation code with each procedure.

      Dr. Chen argues that despite this evidence, the jury was precluded from

finding knowledge for two reasons. First, he argues that he based his claims on a

reasonable interpretation of the CPT Manual. Second, he argues that he relied on

Medicare’s advice in submitting his claims. We believe there was sufficient

evidence for the jury to reject both of these arguments.

      We have recognized that although a defendant’s reasonable interpretation of

a regulation does not preclude a finding of falsity under the FCA, a defendant who

relies on “a good faith interpretation of a regulation is not subject to liability.”

U.S. ex rel. Oliver v. Parsons Co., 195 F.3d 457, 464 (9th Cir. 1999). This is true

“not because his or her interpretation was correct or ‘reasonable’ but because the

good faith nature of his or her action forecloses the possibility that the scienter

requirement is met.” Id. But there is sufficient evidence that Dr. Chen’s

interpretation of the CPT Manual was neither correct nor in good faith, so the jury

                                            5
was entitled to reject Dr. Chen’s assertion that he lacked knowledge because he

based his claims on a reasonable interpretation of the CPT Manual.

      Likewise, the jury reasonably rejected Dr. Chen’s contention that he lacked

knowledge because he relied on Medicare’s advice. Evidence that a defendant

relied on the government’s advice in submitting his claim or informed the

government of the underlying facts prior to submitting the claim may show that the

defendant lacked sufficient knowledge for liability under the FCA. See Wang ex

rel. U.S. v. FMC Corp., 975 F.2d 1412, 1420-21 (9th Cir. 1992) (affirming

summary judgment for defendant where the defendant openly disclosed

deficiencies in quality in an effort to resolve those deficiencies); Hagood, 929

F.2d at 1421 (noting that the government’s knowledge and evidence that the

defendant “did merely what the [government] bid it do” may be relevant in

determining the defendant’s knowledge). But whether government knowledge or

advice proves the defendant’s lack of knowledge is highly fact dependent. See

Hagood, 929 F.2d at 1421 (deferring such an issue to summary judgment or trial).

      Here, the government did not explicitly instruct Dr. Chen to bill as he did.

Dr. Chen states that he relied on three letters from Medicare agents. Each of these

letters concerned individual instances. Although one of the letters explained the

proper use of a particular modifier, there is no evidence that Dr. Chen ever

                                          6
requested or received general billing advice from Medicare agents. Additionally,

the government offered evidence that Dr. Chen either left out important facts or

created documentation after the fact to support his appeals.

      In short, substantial evidence supports the jury's finding that Dr. Chen acted

either with “actual knowledge,” “in deliberate ignorance” or “in reckless disregard”

of the falsity of his claims. 31 U.S.C. § 3729(b)(1)(A).

                                         III

      Finally, Dr. Chen argues that by focusing on the 37 claims reviewed as part

of a 2003 investigation, the government failed to produce any evidence of 3,507 of

the 3,544 false claims submitted to the jury. Given the particulars of this case, we

do not address the potential problems with using sampling and extrapolation to

prove FCA violations. The government established that Dr. Chen submitted and

received payment for all 3,544 consultation claims, and Dr. Chen concedes that the

referral request and services provided were the same for each of these claims.

      The only distinction that Dr. Chen draws among the 3,544 claims is that 37

of these claims were closely examined at trial while the others were not. But even

Dr. Chen concedes that the government need not produce every document related

to every claim. Regardless of the number and date of the claims focused on at

                                          7
trial, we must conclude that the evidence supported the jury’s finding with respect

to all 3,544 claims.

      AFFIRMED.

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