276 F.3d 1032 (8th Cir. 2000), 99-2356, MN Assoc.of Nurse Anesthetists v. Allina Health System Corp.

Docket Nº:99-2356
Citation:276 F.3d 1032
Party Name:MINNESOTA ASSOCIATION OF NURSE ANESTHETISTS, UNITED STATES OF AMERICA, EX REL., PLAINTIFF - APPELLANT, v. ALLINA HEALTH SYSTEM CORP.; UNITY HOSPITAL; MERCY HOSPITAL; MARK SPERRY, M.D.; GARY BAGGENSTOSS, M.D.; JOHN MURPHY; DAVID CUMMING, M.D.; JOHN RYDBERG, M.D.; MIDWEST ANESTHESIOLOGISTS, P.A.; METROPOLITAN ANESTHESIA NETWORK; HEALTH BILLING SYSTEM
Case Date:December 11, 2000
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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276 F.3d 1032 (8th Cir. 2000)

MINNESOTA ASSOCIATION OF NURSE ANESTHETISTS, UNITED STATES OF AMERICA, EX REL., PLAINTIFF - APPELLANT,

v.

ALLINA HEALTH SYSTEM CORP.; UNITY HOSPITAL; MERCY HOSPITAL; MARK SPERRY, M.D.; GARY BAGGENSTOSS, M.D.; JOHN MURPHY; DAVID CUMMING, M.D.; JOHN RYDBERG, M.D.; MIDWEST ANESTHESIOLOGISTS, P.A.; METROPOLITAN ANESTHESIA NETWORK; HEALTH BILLING SYSTEMS, INC.; ALLEN TANK; THELMA M. ALBAY, M.D.; MINDA CASTILLEJOS, M.D.; TERI HEIL, M.D.; SANG HONG, M.D.; TED JANOSSY, M.D.; RAYMOND KLOEPPER, II, M.D.; JOHN MAGDSICK, M.D.; THOMAS MAGGS, M.D.; THOMAS POLTA, M.D.; JOHN ROSEBERG, M.D.; JAI SUH; JEFFREY YUE, M.D.; CRAIG JOHNSON, M.D.; ST. CLOUD HOSPITAL; ANESTHESIA ASSOCIATES, OF ST. CLOUD LTD.; GARY A. BOEKE, M.D.; PHILIP F. BOYLE, M.D.; L. MICHAEL ESPELAND, M.D.; ALAN D. ESPELIEN, M.D.; PAUL J. HALVERSON, M.D.; LANSE C. LANG, M.D.; A. WADE MCMILLAN, M.D.; WILLIAM H. RICE, M.D.; ALLAN REITZ, M.D.; ANNETTE E. ZWICK, M.D.; ANESTHESIOLOGY, P.A.; DOES, I THROUGH XX; ABBOTT NORTHWESTERN HOSPITAL, INC., SUED AS ABBOTT NORTHWESTERN HOSPITAL; NORTHWEST ANESTHESIA, P.A.; BRYCE BEVERLIN, M.D.; RICHARD BLOMBERG, M.D.; JEAN BOENING, M.D.; MITCHELL BURKE, M.D.; RAJARAO DWARAKANATH, M.D.; RICHARD ENGWALL, M.D.; JAMES GAYES, M.D.; LUIS GIRON, M.D.; NANCY GROVES, M.D.; JONATHAN GUDMAN, M.D.; RICHARD W. JOHNSON, M.D.; JOHN C. LILLEHEI, M.D.; ROBERT MCKLVEEN, M.D.; JUDITH MEISNER, M.D.; MICHAEL MENZEL, M.D.; JAMES MUSICH, M.D.; MARK NISSEN, M.D.; XAVIER PEREIRA, M.D.; DAVID PLUT, M.D.; JEFFREY SHAW, M.D.; RICHARD SKOOG, M.D.; WILLIAM STAUFFER, M.D.; OFELIO TIU, M.D.; ROBERT TRONNIER, M.D.; JOHN WINTERMUTE, M.D.; DOES, I THROUGH XX (OTHER UNKNOWN DEFENDANTS); DEFENDANTS - APPELLEES.

UNITED STATES OF AMERICA, MOVANT

UNITED STATES OF AMERICA, AMICUS ON BEHALF OF APPELLANT.

No. 99-2356

United States Court of Appeals, Eighth Circuit

December 11, 2000

January 17, 2002

Appeal from the United States District Court for the District of Minnesota.

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David L. Stone, Hasbrouck Heights, NJ, argued, for appellant.

Sushma Soni, Justice Dept., Washington, DC, argued, Amicus Curiae U.S. appellant.

Thomas L. Fraser, Minneapolis, MN, argued, (John D. French, Jay D. Christiansen, Richard A. Duncan and Elizabeth H. Schmiesing, on the brief), for appellees.

Before McMILLIAN and John R. Gibson, Circuit Judges, and Laughrey, 1

District Judge.

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John R. Gibson, Circuit Judge.

The Minnesota Association of Nurse Anesthetists brought this qui tam suit as relator for the United States, alleging that the defendant hospitals 2 and anesthesiologists 3 had knowingly made false claims on the United States government by mischaracterizing services they had provided to Medicare patients. The Association pleaded that the defendants violated the False Claims Act, 31 U.S.C. § 3729 (1994), by overcharging the government for their services, and that they had conspired among each other to do so. The district court entered summary judgment for the defendants, holding that the Association's own earlier, public disclosure of the information on which this suit is based precluded subject-matter jurisdiction of this suit. The court also held that the Association lacked standing to bring this suit as relator because it had not shown that the mischaracterizations of the services resulted in pecuniary injury to the government. In addition to the jurisdictional and standing rulings, the court also made three holdings on the merits of the Association's case: that there was no showing of intent to defraud the government because the defendants billed in accordance with the advice given them by the Medicare carriers; that the "overwhelming majority of the evidence on the record" established that the defendants did not mischaracterize the services they provided; and that the Association adduced no evidence of conspiracy. We reverse except as to the judgment on the conspiracy allegations, which we affirm.

I.

This case alleges false claims for services rendered under Part B of the Medicare program. The Medicare program is administered by the Department of Health and Human Services through the Health Care Financing Administration, or HCFA. Medicare Part B is a federally subsidized medical insurance program that pays a portion of the insured's medical expenses. The United States reimburses the medical expenses through the HCFA, which, in turn, contracts with private insurance companies to administer and pay claims from the Medicare Trust Fund. United States v. Mackby, 261 F.3d 821, 824 (9th Cir. 2001).

The Association represents the certified nurse anesthetists of Minnesota. Nurse anesthetists are registered nurses who administer

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anesthesia, either alone or under the supervision of an anesthesiologist. The Association claims that the defendant anesthesiologists and hospitals presented false claims for payment by mischaracterizing anesthesia services rendered to Medicare patients from about 1989 to 1997. Four kinds of mischaracterizations are alleged: billing on a reasonable charge basis when the services the anesthesiologists provided did not meet the criteria for reasonable charge reimbursement; billing services as personally performed by the anesthesiologist when the services did not meet the criteria for personal performance; billing as if the anesthesiologist involved were directing fewer concurrent cases than he or she actually did direct; and certifying that it was medically necessary for both an anesthesiologist and anesthetist to personally perform cases that in fact an anesthetist alone personally performed. Understanding the significance of these alleged mischaracterizations requires some understanding of the Medicare regulations as they existed at the various times in question. We will therefore briefly explain the nature of each allegation before considering the questions of jurisdiction and standing and the merits of the case.

A.

The first type of mischaracterization alleged is that anesthesiologists billed services for reasonable charge reimbursement when they did not render services eligible for such reimbursement. In the early 1980s Congress became concerned that hospital-based physicians were charging Medicare for work performed by hospital employees. S. Rep. No. 97-494, at 22 (1982), reprinted in 1982 U.S.C.C.A.N. 781, 797-98. To stop this, Congress directed the Department of Health and Human Services to adopt regulations governing Medicare payments to physicians working in hospitals. Tax Equity and Fiscal Responsibility Act of 1982, Pub.L. No. 97-248, Title I, § 108, 96 Stat. 324, 337 (codified as amended at 42 U.S.C. § 1395xx(a)(1) (1994)). The regulations were to establish criteria for distinguishing between services rendered by a physician to an individual patient, which could be reimbursed on a reasonable charge basis, and services rendered to the provider or to the provider's patient population as a whole, which would be reimbursed on a reasonable cost basis. Id. Accordingly, the Department adopted regulations in 1983 outlining when physicians providing anesthesia services would be reimbursed on a reasonable charge basis. Conditions for payment of charges: Anesthesiology services, 48 Fed. Reg. 8902, 8926-28 (March 2, 1983). A physician could be reimbursed for anesthesiology services in a hospital on a reasonable charge basis if:

(1) For each patient, the physician

(i) Perform[ed] a pre-anesthetic examination and evaluation;

(ii) Prescrib[ed] the anesthesia plan;

(iii) Personally participat[ed] in the most demanding procedures in the anesthesia plan, including induction and emergence;

(iv) Ensure[d] that any procedures in the anesthesia plan that he or she d[id] not perform [were performed] by a qualified individual;

(v) Monitor[ed] the course of anesthesia administration at frequent intervals;

(vi) Remain[ed] physically present and available for immediate diagnosis and treatment of emergencies; and

(vii) Provide[d] indicated postanesthesia care.

(2) The physician either perform[ed] the procedure directly, without the assistance of an anesthetist, or direct[ed] no more than four anesthesia procedures concurrently and [did] not perform any

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other services while he or she [was] directing those concurrent procedures. 42 C. F. R. § 405.552(a) (1983).

If the physician's services did not meet the criteria outlined above, then they were reimbursable only on a reasonable cost basis, as physician services to the provider. 42 C.F.R. § 405.552(b) (1983); 48 Fed. Reg. at 8927.

In its complaint in this case, the Association claimed that the anesthesiologists billed on a reasonable charge basis when they had not met the criteria for reasonable charge reimbursement and that the hospitals actively aided the anesthesiologists in the false billing. Specifically, the Association alleged that anesthesiologists at Unity, Mercy, and North Memorial hospitals commonly billed for medical direction of cases in which they never entered the operating room and of cases in which they were not present at the patient's emergence from anesthesia. At Abbott Northwestern and St. Cloud hospitals, the Association alleged that, while the anesthesiologists were usually present at emergence, they sometimes billed on a reasonable charge basis even though they were unavailable for emergencies (as shown by their failure to answer pages) and were absent at emergence.

B.

Second, the Association alleged that the anesthesiologists billed for personally performing cases when they did not meet the criteria for personal performance of the case.

Effective in 1992, HCFA adopted a three-tier system of payment for anesthesiologists providing anesthesia. 56 Fed. Reg. 59502, 59628 (Nov. 25, 1991) (codified at 42 C.F.R. § 414.46(c) (1992)). Under that system, Medicare would pay...

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