United States ex rel. Chorches v. Am. Med. Response, Inc.

• Decision Date: 27 July 2017
• Docket Number: Docket No. 15-3930,August Term, 2016
• Citation: 865 F.3d 71
• Parties: UNITED STATES of America, EX REL. Ronald I. CHORCHES as Trustee FOR the BANKRUPTCY ESTATE OF Paul FABULA, and Paul Fabula, Plaintiffs-Appellants, v. AMERICAN MEDICAL RESPONSE, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

865 F.3d 71

UNITED STATES of America, EX REL. Ronald I. CHORCHES as Trustee FOR the BANKRUPTCY ESTATE OF Paul FABULA, and Paul Fabula, Plaintiffs-Appellants,

v.AMERICAN MEDICAL RESPONSE, INC., Defendant-Appellee.^*

Docket No. 15-3930

August Term, 2016

United States Court of Appeals, Second Circuit.

Argued: February 27, 2017

Decided: July 27, 2017

Jonathan M. Levine (David S. Golub, on the brief), Silver Golub & Teitell LLP, Stamford, CT, for Plaintiffs-Appellants.

Pamela L. Johnston , Foley & Lardner LLP, Los Angeles, CA (Lawrence M. Kraus, Foley & Lardner LLP, Boston, MA, on the brief), for Defendant-Appellee.

Jeffrey S. Bucholtz, Paul Alessio Mezzina, King & Spalding LLP, Washington, DC, and Kathryn Comerford Todd, Warren Postman, U.S. Chamber Litigation Center, Washington, DC. for Amicus Curiae The Chamber of Commerce of the United States of America in support of Defendant-Appellee.

Before: Katzmann, Chief Judge, and Lynch and Chin, Circuit Judges.

Gerard E. Lynch, Circuit Judge:

Plaintiffs-appellants brought this action under the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq. , against defendant-appellee American Medical Response, Inc. ("AMR"), alleging (1) in a qui tam claim, that AMR made false statements and submitted false claims to the government for reimbursement under the Medicare and Medicaid programs, and (2) in an individual claim, that AMR retaliated against plaintiff-appellant Paul Fabula for his refusal to falsify a document. The qui tam claim is asserted by bankruptcy trustee Ronald I. Chorches for and on behalf of the United States of America and for the benefit of Fabula's bankruptcy estate. The retaliation claim is asserted by Fabula individually.

The United States District Court for the District of Connecticut (Michael P. Shea, Judge ) dismissed both claims: the first on the ground that Chorches failed to allege with the specificity required by Federal Rule of Civil Procedure 9(b) that AMR submitted false claims to the government, and the second on the ground that Fabula's refusal to falsify a document to effectuate AMR's alleged scheme to submit false claims did not constitute protected activity under the FCA's anti-retaliation provision. After deciding, as preliminary matters, that the district court had jurisdiction over Chorches's qui tam claim and that Fabula did not abandon his retaliation claim, we conclude (1) that Chorches has pled the submission of false claims with sufficient particularity under Rule 9(b), as applied in the qui tam context; and (2) that Fabula's refusal to falsify a patient report, under the circumstances of this case, qualifies as protected activity. Accordingly, we VACATE the judgment of the district court, and REMAND for further proceedings consistent with this opinion.

BACKGROUND

The following facts are taken largely from the second and third amended complaints filed in this action (the "SAC" and the "TAC," respectively). As required when reviewing a motion to dismiss a complaint for failure to state a claim, we accept these facts as true for purposes of this opinion. See O'Brien v. Nat'l Prop. Analysts Partners , 936 F.2d 674, 676-77 (2d Cir. 1991).

From August 2010 to December 2011, Fabula worked as an Emergency Medical Technician ("EMT") in the New Haven, Connecticut branch office of AMR, the largest ambulance company in the United States. In February 2011, while he was employed at AMR, Fabula filed for Chapter 7 bankruptcy; he received a discharge of his debts in May 2011; and his bankruptcy case was closed in June 2011.

As an EMT, Fabula provided emergency and non-emergency medical transport services, some of which were reimbursable under Medicare and/or Medicaid. According to the complaints, AMR engaged in a scheme to fraudulently obtain reimbursement from Medicare by falsely certifying ambulance transports as medically necessary and submitting claims that it knew were not properly reimbursable under the rules and regulations governing payments by Medicare.¹

The execution of the alleged scheme was relatively straightforward. Medicare pays AMR only for ambulance transports that were "medically necessary," as explained in the Medicare Benefit Policy Manual. Medical necessity is established when the patient's condition is such that use of any other method of transportation is contraindicated (i.e. , inadvisable for the patient's health). Thus, in any case in which some means of transportation other than an ambulance can be used without endangering the individual's health, whether or not such other transportation is actually available, Medicare does not pay for ambulance services. Even when the services are deemed medically necessary, moreover, Medicare payments are based on the level of services furnished, not simply on the vehicle used. As a result, in order to receive reimbursement from Medicare, AMR was required to review and submit information about the condition of patients and the emergency or non-emergency medical services that it had provided to them.

When AMR dispatched an ambulance to transport someone (in industry parlance, a "run"), the participating paramedics and/or EMTs were required to complete an electronic Patient Care Report ("PCR"). The PCRs documented information such as the date, time, and address of the pickup; the name of the person being transported; the name of the medical facility to which the person was transported; and a description of the condition of the person being transported. They were created electronically on a laptop computer during, or immediately following, a run. The description of the transported person's condition determines whether a run is treated as "medically necessary."

The TAC alleges that during the period of Fabula's employment, AMR routinely made its EMTs and paramedics revise or recreate their field-generated PCRs to include false statements purportedly demonstrating medical necessity to ensure that runs would be reimbursable by Medicare, whether or not ambulance service was in fact medically necessary in the particular case. AMR supervisors provided the EMTs and paramedics with printouts of their original PCRs prepared at the time of the run, marked up with handwritten revisions that altered the substance of the original PCRs so as to falsely characterize runs as medically necessary. Supervisors at AMR specifically instructed EMTs and paramedics how to modify the PCRs by including false or misleading information, and admitted to Fabula that the purpose of such revisions was to qualify the run for Medicare reimbursement. The participation of the EMTs and paramedics in the revision of the PCRs was required because those employees had unique log-in passwords that allowed them to alter the PCRs and prevented AMR supervisors from revising the PCRs themselves. After the EMTs and paramedics had revised or recreated the original PCRs, AMR supervisors collected and shredded the printouts with the handwritten changes. The falsified electronic PCRs remained in AMR's database, to be used for billing purposes.

In addition to identifying several general categories of patients who were susceptible to having their runs falsely certified as medically necessary (for example, calm and cooperative dementia patients were routinely written up as having a history of violence), the TAC identifies more than ten specific runs for which Fabula was ordered to alter PCRs to include false or misleading information.² A few examples follow.

On July 7, 2011, Fabula and paramedic William Shick transported several patients to the hospital in response to 911 calls. About two weeks later, Fabula was asked to revise four of the PCRs by adding information about the patients' previous surgeries and injuries, implying that such history made ambulance service medically necessary, even though one patient with a chronic allergy issue had no medical need for an ambulance but wanted a ride to the hospital because she thought she could avoid a wait at the hospital if she was brought in by an ambulance, and another patient called for an ambulance only because he felt that he should not have to buy his own cough

syrup. On October 17, 2011, Fabula was in the midst of transporting a patient to the hospital, when the run was canceled when it was learned that it was not the correct date for the patient's medical appointment. Nevertheless, AMR made Fabula complete a "return trip PCR," as if the patient had been transported both to and from the hospital. TAC ¶ 101. On December 4, 2011, Fabula and Douglass Gladstone (also an EMT) assisted in transporting an obese patient who "had no medical reason to be sent to the hospital, he simply wanted to go there." TAC ¶ 100. The patient was able to walk himself to the stretcher and climb on unassisted. An AMR supervisor instructed Fabula to insert information about the patient's previous surgeries to justify his transport to the hospital. That same patient called 911 six dozen times during 2011 for an ambulance to bring him to a medical facility to obtain insulin. AMR directed Fabula, under threat of being placed on unpaid leave, to state falsely in the PCRs for those runs that the patient had difficulty remaining in an upright position.

Another run in December 2011, in which Fabula assisted paramedic Kevin Bodiford, ultimately led to Fabula's effective termination by AMR.³ For several weeks following the run, an AMR supervisor repeatedly instructed Bodiford, who had completed the original PCR (the "December 2011 PCR"), to revise his PCR so that it could be submitted to Medicare for payment. Bodiford refused to resubmit the PCR and told a supervisor that Fabula was responsible for the run. In February 2012, while Fabula was on medical leave, the supervisor contacted Fabula and "told [him] to return to AMR under the guise of recreating a PCR from a run made in early December of 2011 that [the supervisor] said had been lost." SAC ¶ 70. Fabula responded by email that he was uncomfortable with the request. Later that same...