198 F.3d 502 (4th Cir. 1999), 99-1905, United States v Oncology Associates

Docket Nº:99-1905
Citation:198 F.3d 502
Party Name:UNITED STATES OF AMERICA, EX REL. SYED RAHMAN, M.D., PLAINTIFF-APPELLANT, AND SYED RAHMAN, M.D., PLAINTIFF, v. ONCOLOGY ASSOCIATES, P.C.; ONCOLOGY SERVICES CORPORATION; DOUGLAS COLKITT, M.D.; JEROME DERDEL, M.D.; JOANNE RUSSELL; ONCOLOGY FUNDING CORPORATION; STONEBORO ONCOLOGY ASSOCIATES, P.C.; WARREN ONCOLOGY ASSOCIATES, P.C.; PHOENIXVILLE ONCOLOG
Case Date:December 14, 1999
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 502

198 F.3d 502 (4th Cir. 1999)

UNITED STATES OF AMERICA, EX REL. SYED RAHMAN, M.D., PLAINTIFF-APPELLANT,

AND

SYED RAHMAN, M.D., PLAINTIFF,

v.

ONCOLOGY ASSOCIATES, P.C.; ONCOLOGY SERVICES CORPORATION; DOUGLAS COLKITT, M.D.; JEROME DERDEL, M.D.; JOANNE RUSSELL; ONCOLOGY FUNDING CORPORATION; STONEBORO ONCOLOGY ASSOCIATES, P.C.; WARREN ONCOLOGY ASSOCIATES, P.C.; PHOENIXVILLE ONCOLOGY ASSOCIATES, P.C.; LITTLESTOWN ONCOLOGY ASSOCIATES, P.C.; LEHIGHTON ONCOLOGY ASSOCIATES, P.C.; EXTON ONCOLOGY ASSOCIATES, P.C.; BUCKS COUNTY ONCOLOGY ASSOCIATES, P.C.; GREENBELT CANCER TREATMENT CENTER, L.P.; ATLANTIC RADIATION ONCOLOGY L.L.C.; DERDEL RANDALLSTOWN ONCOLOGY ASSOCIATES, P.C.; ATLANTIC RADIATION ONCOLOGY ASSOCIATES, P.C.; DERDEL UNION MEMORIAL ONCOLOGY ASSOCIATES, P.C.; DERDEL RIVERSIDE ONCOLOGY ASSOCIATES, P.C.; DERDEL CHESAPEAKE ONCOLOGY ASSOCIATES, P.C.; OKEECHOBEE ONCOLOGY ASSOCIATES, P.A.; KEY WEST ONCOLOGY ASSOCIATES, P.A.; TAMPA ONCOLOGY ASSOCIATES, P.A.; TREASURE COAST ONCOLOGY ASSOCIATES, P.A.; LAUDERDALE LAKES ONCOLOGY, P.A.; ST. LAWRENCE ONCOLOGY, P.C.; LIBERTY ONCOLOGY ASSOCIATES, P.C.; COMMUNITY RADIATION THERAPY ASSOCIATES, P.C.; KINGS PLAZA RADIOLOGY, P.C.; SOUTHERN NEW JERSEY CANCER TREATMENT; WILLIAMS COUNTY ONCOLOGY ASSOCIATES, P.C.; PARK ONCOLOGY ASSOCIATES, P.C.; PARKS ONCOLOGY ASSOCIATES, INCORPORATED; GHCC INCORPORATED F.K.A. GREATER HARRISBURG CANCER CENTER, INCORPORATED; MGH CANCER TREATMENT

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CENTER, L.P.; ONCOLOGY SERVICES CORPORATION OF LAWNWOOD; KEYS CANCER CENTER LIMITED PARTNERSHIP; XCC, INCORPORATED; GPCC, INCORPORATED; IRCC, INCORPORATED; KRTC, INCORPORATED; LVCC, INCORPORATED; MGHCC, INCORPORATED; MHCC, INCORPORATED; MARYLAND GENERAL CANCER CENTER, INCORPORATED; ST. LUCIE COUNTY RADIATION ONCOLOGY, LIMITED; ONCOLOGY ASSOCIATES, PC/INDIANA; ONCOLOGY ASSOCIATES, PC/ALBEMARLE; DERDEL MARYLAND GENERAL ONCOLOGY ASSOCIATES, PC; DERDEL MGH ONCOLOGY ASSOCIATES, PC; KANKAKEE ONCOLOGY ASSOCIATES, PC; ONCOLOGY ASSOCIATES, PC/HARRISBURG; PLEASANT HILLS ONCOLOGY ASSOCIATES, PC; ONCOLOGY ASSOCIATES, PC/LEBANON; ONCOLOGY ASSOCIATES, PC/SALISBURY; FLAGSTAFF ONCOLOGY ASSOCIATES, PC; FORT PIERCE ONCOLOGY ASSOCIATES, PC; GREENWAY ONCOLOGY ASSOCIATES, PC; GREATER PITTSBURGH ONCOLOGY ASSOCIATES, PC; NORTHWEST RADIATION TREATMENT SERVICES, INCORPORATED; MARLTON ONCOLOGY, PC; RANDALLSTOWN ONCOLOGY CENTER, INCORPORATED; WESTCHESTER ONCOLOGY, PC; CHESAPEAKE REGIONAL CANCER CENTER, INCORPORATED; UNION MEMORIAL ONCOLOGY CENTER, INCORPORATED; WILLIAMS COUNTY ONCOLOGY ASSOCIATES, INCORPORATED; TRISTATE ONCOLOGY ASSOCIATES, INCORPORATED; HERITAGE HILLS MEDICAL, LP; RIVERSIDE ONCOLOGY; JEFFERSON RADIATION ONCOLOGY CENTER, LP; ALBEMARLE REGIONAL CANCER CENTER, LP; BROWARD RADIATION THERAPY CORPORATION; LAKE OKEECHOBEE CANCER CENTER, INCORPORATED; LAWNWOOD REGIONAL CANCER CENTER, LP; ONCOLOGY SERVICES CORPORATION OF KEY WEST, INCORPORATED; ONEONTA RADIATION ONCOLOGY, PC; ONCOLOGY SERVICES CORPORATION OF TAMPA, INCORPORATED; GREENBELT CANCER TREATMENT CENTER; BILLING SERVICES, INCORPORATED; NATIONAL MEDICAL FINANCIAL SERVICES CORPORATION; COLKITT ONCOLOGY GROUP, INCORPORATED; EQUIMED, INCORPORATED; DEFENDANTS-APPELLEES,

AND

GREATER HARRISBURG CANCER CENTER, INCORPORATED; ONCOLOGY ASSOCIATES, PC/LIFE CARE; ONCOLOGY ASSOCIATES, PC/HERITAGE HILLS; ONCOLOGY ASSOCIATES, PC/PITTSBURGH; CANCER CENTER OF NORTHERN ARIZONA PTR; SALISBURY RADIATION ONCOLOGY CENTER, INCORPORATED; MEDTREND HEALTH SYSTEMS, INCORPORATED; ST. LAWRENCE ONCOLOGY, PC/OGDENSBURG; PMCB, INCORPORATED; ST. LAWRENCE ONCOLOGY, PC/BROOKLYN; SKYLINE ONCOLOGY ASSOCIATES, P.C. PITTSBURGH, PA; MALONE ONCOLOGY ASSOCIATES, P.C., STATE COLLEGE, PA; NIXON EQUIPMENT CORPORATION, A CORPORATION FORMED UNDER THE LAWS OF NEVIS STATE COLLEGE, PA; THOMAS JEFFERSON REAL ESTATE CORPORATION, A CORPORATION FORMED UNDER THE LAWS OF NEVIS STATE COLLEGE, PA; GEORGE WASHINGTON REAL ESTATE CORPORATION, A CORPORATION FORMED UNDER THE LAWS OF NEVIS STATE COLLEGE, PA; OAKTREE CANCER CARE, INCORPORATED, PITTSBURGH, PA; KEYSTONE ONCOLOGY, LLC, STATE COLLEGE PA; EASTERN PENNSYLVANIA ONCOLOGY, LLC; MASSACHUSETTS RADIATION ONCOLOGY SERVICES, P.C.; CHESTER COUNTY ONCOLOGY, LLC; ROSEWOOD CANCER CARE, INCORPORATED; FLORIDA ONCOLOGY, P.A.; COASTAL ONCOLOGY, LLC, DEFENDANTS,

v.

HIGHMARK, INCORPORATED DBA XACT MEDICARE SERVICES; NORIDIAN MUTUAL INSURANCE COMPANY DBA BLUE CROSS BLUE SHIELD OF NORTH DAKOTA; AETNA INCORPORATED; BLUE CROSS BLUE SHIELD OF FLORIDA; HEALTH CARE SERVICE CORPORATION, A MUTUAL LEGAL RESERVE COMPANY; TRAILBLAZER HEALTH ENTERPRISES, LLC; BLUE CROSS BLUE SHIELD OF MARYLAND, INCORPORATED; EMPIRE BLUE CROSS AND BLUE SHIELD; GROUP

Page 504

HEALTH INCORPORATED; BLUE CROSS AND BLUE SHIELD OF WESTERN NEW YORK, INCORPORATED; CIGNA CORPORATION; CONNECTICUT GENERAL LIFE INSURANCE COMPANY; NATIONWIDE MUTUAL INSURANCE COMPANY, THIRD-PARTY DEFENDANTS.

No. 99-1905

United States Court of Appeals, Fourth Circuit

December 14, 1999

Argued: September 22, 1999

Appeal from the United States District Court for the District of Maryland, at Baltimore. Alexander Harvey II, Senior District Judge. (CA-95-2241-H)

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Argued: Dana Joan Martin, Appellate Staff, Civil Division, United States Department OF Justice, Washington, D.C., for Appellant. Paul Mark Sandler, Freishtat & Sandler, Baltimore, Maryland, for Appellees. ON Brief: David W. Ogden, Acting Assistant Attorney General, Lynne A. Battaglia, United States Attorney, Mark B. Stern, Appellate Staff, Civil Division, United States Department OF Justice, Washington, D.C., for Appellant.

Before Widener and Niemeyer, Circuit Judges, and James H. Michael, Senior United States District Judge for the Western District of Virginia, sitting by designation.

Affirmed in part, reversed in part, and remanded by published opinion. Judge Niemeyer wrote the opinion, in which Judge Widener and Senior Judge Michael joined.

OPINION

Niemeyer, Circuit Judge

The defendants in this case, who are radiation oncology service providers, obtained a writ of mandamus from the district court, compelling the United States (the Health Care Financing Administration ("HCFA")) and its administering contract carriers to proceed promptly with the administrative process established for processing providers' Medicare Part B reimbursements. The United States had suspended the administrative process pending judicial determination in this case of whether the oncology service providers defrauded HCFA and whether they are entitled to reimbursement.

We affirm the district court's writ of mandamus insofar as it requires HCFA and its contract carriers to proceed with

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the administrative process established by regulation without regard to the progress of this action, but we reverse the district court's requirement that they accomplish the next step in the administrative process -- that of making overpayment determinations as provided by 42 C.F.R. § 405.372(c) -- within 20 days.

I.

The United States filed its complaint in this case against Dr. Douglas Colkitt; his wife; his business partner, Dr. Jerome Derdel; and more than 80 healthcare entities owned, operated, or controlled by Colkitt, which provide diverse healthcare services in the field of radiation oncology. The complaint, as amended, alleges that the defendant oncology service providers engaged in fraudulent billing schemes involving the Medicare Part B program during the 1992-1997 period and the CHAMPUS program (the Medicare counterpart for the uniformed services) during the 1992-1996 period, causing losses to these programs in excess of $12 million. Specifically, the United States alleges that the defendants claimed reimbursement on bills for radiation oncology services that were neither provided nor ordered by the physician and on bills for unnecessary radiation oncology services, and that the defendants misrepresented the medical services rendered in order to obtain both higher and double reimbursements for services.

Before this action was commenced, some of these oncology service providers had applied to the Medicare Part B program for reimbursement of more than $2 million in services that HCFA had directed its carriers to suspend because of HCFA's suspicion of fraud. In particular, HCFA suspended various reimbursement payments to some 23 of the defendant Medicare providers on October 8, 1998, December 18, 1998, and March 16, 1999, totaling approximately $2.2 million. The Department of Justice ("DOJ"), which filed this action on behalf of the United States, took the position that the administrative process should be suspended until judgment was reached in this action because the administrative forum was neither intended nor sufficient to deal with cases of Medicare fraud. As a result, the contract carriers -- private insurance companies under contract with HCFA to process claims for Medicare reimbursement, see infra Part IV.A --took no further steps in the administrative process, which includes the critical determination of the amount of overpayment, a step that is a condition precedent to the providers' right to challenge HCFA's position through the administrative process. See 42 C.F.R. § 405.801. The administrative process has accordingly come to a halt. At oral argument, the United States conceded that it has stayed the administrative proceedings pending the outcome of this litigation. The United States also took this position before the district court ("It is the Agency's position that to make [the overpayment determinations] requires information that's coming out in this False Claims Act case").

On April 28, 1999, the defendants filed a motion for a writ of mandamus in this action, then pending before the district court, to compel HCFA and its contract carriers to lift the reimbursement payment suspensions, or...

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