Graves v. Plaza Med. Ctrs., Corp.

• Decision Date: 20 March 2017
• Docket Number: Case No. 10–23382–CIV–MORENO
• Citation: 281 F.Supp.3d 1260
• Parties: Olivia GRAVES, Plaintiff/Relator, v. PLAZA MEDICAL CENTERS, CORP., Humana, Inc., and Michael Cavanugh, Defendants.
• Court: U.S. District Court — Southern District of Florida

281 F.Supp.3d 1260

Olivia GRAVES, Plaintiff/Relator,

v.PLAZA MEDICAL CENTERS, CORP., Humana, Inc., and Michael Cavanugh, Defendants.

Case No. 10–23382–CIV–MORENO

United States District Court, S.D. Florida, Miami Division.

Signed March 20, 2017

Daniel S. Gelber, Adam Michael Schachter, Gelber Schachter & Greenberg, P.A., David E. Werner, Jonathan Edward Freidin, Philip Freidin, Freidin Brown, P.A., Douglas Fredric Eaton, William Gregg Wolk, Eaton & Wolk P.L., Miami, FL, David E. Farber, Faith Elizabeth Gay, David C. Kramer, Jon C. Cederberg, Quinn Emanuel Urquhart & Sullivan, LLP, Valerie Roddy, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, CA, Justin S. Brooks, Pro Hac Vice, Guttman, Buschner & Brooks PLLC, Philadelphia, PA, Reuben A. Guttman, Pro Hac Vice, Guttman, Buschner & Brooks, PLLC, Sam S. Sheldon, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan, Washington, DC, Mark Alan Lavine, United States Attorney's Office, West Palm Beach, FL, for Plaintiff/Relator.

Steven Murray Weinger, Helena Marie Tetzeli, Kurzban Kurzban Weinger & Tetzeli, Ryan C. Zagare, Miami-Dade County Attorney's Office, Robert DonaldWike Landon, III, Todd Rapp Friedman, Kenny Nachwalter, P.A., Miami, FL, David Deaton, Pro Hac Vice, Stephen M. Sullivan, Pro Hac Vice, O'Melveny & Myers, LLP, Los Angeles, CA, David J. Leviss, Pro Hac Vice, K. Lee Blalack, II, Pro Hac Vice, Kevin D. Feder, Pro Hac Vice, Scott Hammack, Pro Hac Vice, William T. Buffaloe, Pro Hac Vice, O'Melveny & Myers, LLP, Washington, DC, for Defendants.

ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION AND DENYING DEFENDANT HUMANA, INC.'S MOTION FOR SUMMARY JUDGMENT

FEDERICO A. MORENO, UNITED STATES DISTRICT JUDGE

THE MATTER was referred to the Honorable John J. O'Sullivan, United States Magistrate Judge, for a Report and Recommendation on Defendant Humana, Inc.'s Motion for Summary Judgment (D.E. 630), filed on October 27, 2016. The Magistrate Judge filed a Report and Recommendation (D.E. 811) on February 27, 2017. The Court has reviewed the entire file and record. The Court has made a de novo review of the issues that the Magistrate Judge's Report and Recommendation present, and being otherwise fully advised in the premises, it is

ADJUDGED that United States Magistrate Judge John O'Sullivan's Report and Recommendation is AFFIRMED and ADOPTED. Accordingly, it is

ADJUDGED that Defendant Humana, Inc.'s Motion for Summary Judgment is DENIED.

REPORT AND RECOMMENDATION

JOHN J. O'SULLIVAN, UNITED STATES MAGISTRATE JUDGE

THIS CAUSE comes before the Court on the Defendant Humana Inc.'s Motion for Summary Judgment and Memorandum of Law in Support Thereof (DE# 630, 10/27/16); the Relator's Motion to Strike or, in the Alternative, Limit the Testimony of Leslie Norwalk (DE# 712, 12/28/16), and the Defendant Humana Inc.'s Motion to Exclude Testimony of Dr. Gerard Anderson (DE# 728, 12/28/16). Pursuant to 28 U.S.C. § 636 and Magistrate Judge Rule 1(C), the Honorable Federico A. Moreno referred this matter to take all necessary and proper action as required by law with respect to any and all pretrial matters. (DE# 134, 1/28/15). Having reviewed the defendant's motion, the plaintiff's response, the defendant's reply, the defendant's supplement, and the United States' statement of interest, as well as the evidence in the record, the undersigned recommends that the Defendant Humana Inc.'s Motion for Summary Judgment and Memorandum of Law in Support Thereof (DE# 630, 10/72/16) be DENIED for the reasons stated herein.

INTRODUCTION

The defendant, Humana Inc. ("Humana" or "defendant"), seeks summary judgment on the relator's claims based on the False Claims Act (2006) ("FCA") and as amended by the Fraud Enforcement Recovery Act of 2009 ("FERA") in the Fourth Amended Complaint. (DE# 382) The relator asserts five counts against Humana. First, the relator alleges that from 2006 through 2011, Humana submitted to the Centers for Medicare and Medicaid Services ("CMS") false diagnosis codes generated by Dr. Cavanaugh and Plaza Medical Centers and that because of the allegedly false diagnosis codes generated by Plaza Medical Centers, Humana made false statements when it certified the accuracy of the risk adjustment data it submitted to CMS during the same period. Second, the relator asserts that Humana concealed and improperly avoided returning overpayments to the government in violation of the reverse false claims provision of the FCA. The relator's five counts against Humana are based on the same diagnosis codes provided by Plaza Medical Centers. Knowledge is an element of each of the five claims asserted against Humana under the FCA and is the only element raised in the summary judgment.

Humana seeks summary judgment on the ground that the relator has failed to carry her burden in opposition to summary judgment because the evidence does not create a genuine issue of material fact regarding Humana's knowledge. The relator maintains that the record evidence presents a fact question for a jury to determine whether Humana recklessly disregarded its obligations to certify the truth and accuracy of its submissions to CMS regarding Dr. Cavanaugh's and Plaza Medical Centers' patients and whether Humana knowingly failed to remit overpayments due to the false diagnosis codes it submitted to CMS.

The motion is ripe for disposition.

DISCUSSION

I. Legal Standard

The Court, in reviewing a motion for summary judgment, is guided by the standard set forth in Federal Rule of Civil Procedure 56(a), which states, in relevant part, as follows:

A party may move for summary judgment, identifying each claim or defense—or the part of each claim or defense—on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.

Fed. R. Civ. P. 56 (a).

The Court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law. The moving party bears the burden of meeting this standard. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). That is, "[t]he moving party bears the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." U.S. v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991) (quoting Celotex, 477 U.S. at 323, 106 S.Ct. 2548 ) (internal quotation marks omitted). In assessing whether the moving party has satisfied this burden, the Court is required to view the evidence and all factual inferences arising therefrom in the light most favorable to the non-moving party. Batey v. Stone, 24 F.3d 1330, 1333 (11th Cir. 1994). Summary judgment is appropriate when there is no dispute as to any material fact and only questions of law remain. Id. If the record presents factual issues, the Court must deny the motion and proceed to trial. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).

II. Material Issues of Fact Exist as to Humana's Knowledge under the FCA

A. Pertinent CMS Regulations

The Centers for Medicare and Medicaid Services ("CMS") require Medicare Advantage Organizations ("MAOs"), like Humana, to attest to the truth and accuracy of the diagnosis data submitted to CMS and to detect and investigate fraud in the Medicare Advantage ("MA") program. The federal regulations require MAOs to "adopt and implement an effective compliance program, which must include measures that prevent, detect, and correct non-compliance with CMS' program requirements as well as measures that prevent, detect, and correct fraud, waste, and abuse...." 42 C.F.R. § 422.503(b)(4)(vi). Among the minimum core requirements that a compliance program must fulfill is the "[e]stablishment and implementation of an effective system for routine monitoring and identification of compliance risks" that "include[s] internal monitoring and audits." 42 C.F.R. § 422.503(b)(4)(vi)(F). Additionally, MAOs like Humana are required to certify (based on best knowledge, information, and belief) the accuracy, completeness, and truthfulness of the encounter data submitted. 42 C.F.R. § 422.504(l ).

Because risk-adjustment data provides the foundation for payment under Medicare Advantage, and because CMS recognizes that "there is an incentive for MA Organizations ["MAOs"] to potentially over-report diagnoses so that they can increase their payment ...," 79 Fed. Reg. 1918, 2001 (Jan. 10, 2014), MAOs are required to expressly "certify (based on best knowledge, information, and belief") that the data they submit, including diagnosis codes, is "accurate, complete, and truthful." 42 C.F.R. § 422.504(l )(2). Since 2000, the CMS regulations have clearly stated that the certification requirement imposes upon MAOs "an obligation to undertake ‘due diligence’ to ensure the accuracy, completeness, and truthfulness of encounter data submitted" and that MAOs "will be held responsible for making good faith efforts to certify the accuracy, completeness, and truthfulness of encounter data submitted." 65 Fed. Reg. 40,170, 40, 268 (June 29, 2000) ; see Medicare Program; Medicare+Choice Program, 65 Fed. Reg. 40,170, 40, 268 (June 29, 2000) (CMS stated that MAOs "will be held responsible for making good faith efforts to certify the accuracy, completeness, and truthfulness of encounter data submitted.") Humana's contract with CMS similarly required its Chief Financial Officer or delegate to attest annually "(based on best knowledge, information and belief, as of the date specified on the attestation form) that the risk adjustment data it submits to CMS under 422.310 are accurate, complete and truthful." Relator's AMF ¶ 2.

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