State Of Mo. v. Spilton

• Decision Date: 29 June 2010
• Docket Number: No. SC 90586.,SC 90586.
• Parties: STATE of Missouri, et al., Respondents, v. Stephanie SPILTON, LCSW, Appellant.
• Court: Missouri Supreme Court

315 S.W.3d 350

STATE of Missouri, et al., Respondents,

v.Stephanie SPILTON, LCSW, Appellant.

No. SC 90586.

Supreme Court of Missouri

En Banc.

June 29, 2010.

COPYRIGHT MATERIAL OMITTED

Michael J. Sudekum and Alan S. Mandel of Schlueter, Mandel & Mandel LLP, St. Louis, for Appellant.

Jeremiah J. Morgan and Stephanie Gwillim, Attorney General's Office, Jefferson City, for respondents.

WILLIAM RAY PRICE, JR., Chief Justice.

Because there is no genuine issue of material fact as to whether Stephanie Spil-ton knowingly violated the Medicaid fraud statute and because her constitutional claims fail, summary judgment for the state of Missouri is affirmed.

Facts and Procedural Background

The Missouri Medicaid Program ("the Program") serves indigent and low-income people pursuant to section 208.201, RSMo (2000).¹ Due to the high volume of claims received by the Program, it has set up a post-payment review system in which a sampling of the submitted claims are reviewed. Stephanie Spilton, who appeals here, is a clinical social worker who has been a licensed Missouri Medicaid Service Provider since 2001. As part of Spilton's licensing procedure, she was required to affirm, in writing, that she would comply with Medicaid rules and regulations as required by the Division of Medical Services and the United States Department of Health and Human Services. These rules and regulations govern the submission of claims for payment, the disclosure of services rendered, and the retention of records. In conjunction with her licensing, the Division of Medical Services gave Spilton a unique Medicaid provider number by which she could submit claims to the Program for reimbursement. Spilton agreed that if she did not comply with the rules of the Program, she was not entitled to reimbursement for her claims.

In 2005, the Attorney General's Medicaid Fraud Control Unit began an investi- gation into the claims Spilton submitted during 2004. The investigation revealed that Spilton had committed 325 separate violations of sec. 191.905.1(1), ² which prohibits knowingly presenting a claim for reimbursement that is false. The state filed suit against Spilton, alleging Medicaid fraud, breach of contract, unjust enrichment, and fraudulent misrepresentation.

In March 2007, after service of a subpoena in April 2006, Spilton met with the Medicaid Fraud Control Unit and ultimately wrote and signed a statement admitting that she submitted claims for services she did not provide. On March 15, 2007, she wrote: "I am responsible for illegal activities." "I am aware I did not follow required procedure." "I cannot explain in any way why I displayed the illegal behavior... it was 100% wrong for many reasons." "I accept full responsibility." Spilton also confessed in an interview with Medicaid Fraud Unit investigators Robert Hyder II and Melinda Ochoa that she "created patient records" to corroborate the claims she submitted to the state for reimbursement. In October 2008, however, in her response to the state's motion for summary judgment, Spilton asserted the Fifth Amendment privilege against self-incrimination.

In July 2009, the St. Louis County Circuit Court granted the state's motion for summary judgment as to Medicaid fraud. Because the court provided complete relief to the state on count one, it overruled the motion as to the state's other three counts.³ The trial court awarded the state actual damages in the amount of $45,385, civil penalties in the amount of $1,625, 000, and, pursuant to sec. 191.905.12, treble damages in the amount of $136,155.

Spilton appealed the ruling to the court of appeals, arguing that summary judgment was improper because there was a genuine issue of material fact as to whether she "knowingly" submitted false claims, as required by sec. 191.905.1(1). In addition, she argued that the civil penalties delineated under sec. 191.905.12 violate the due process clauses of the Missouri and United States Constitutions. Her appeal was subsequently transferred to this Court pursuant to Mo. Const. art. V, sec. 11.

Jurisdiction

Because this case involves a challenge to the validity of a Missouri statute, this Court has exclusive jurisdiction. Mo. Const. art. V, sec. 3.

Analysis

Standard of Review

Summary judgment is appropriate if there is "no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Rule 74.04(c)(0); Weinstein v. KLT Telecom, Inc., 225 S.W.3d 413, 415 (Mo. banc 2007). The required procedure for summary judgment motions is found in Rule 74.04. The party seeking summary judgment must attach "a statement of uncon-troverted material facts... [stated] with particularity in separately numbered paragraphs" and supported "with specific references to the pleadings, discovery, exhibits, or affidavits." Rule 74.04(c)(1). The responding party must then "admit or deny each of the movant's factual state- ments in numbered paragraphs." Rule 74.04(c)(1). Denials may not rest upon mere allegations. Rather, the response must "support each denial with specific references to the discovery, exhibits, or affidavits that demonstrate specific facts showing that there is a genuine issue for trial." Id. The record is reviewed in the light most favorable to the party against whom judgment was entered. ITT Commercial Fin. Corp. v. Mid-Am Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993).

The Statute

Section 191.905.1 sets out what acts constitute Medicaid fraud in Missouri and the civil and criminal sanctions for those acts. Subsections 191.905.1(1-3) provide that a violation occurs by:

1 "Knowingly presenting to a health care payer a claim for a health care payment that falsely represents that the health care payment is claimed was medically necessary, if in fact it was not," ⁴

2 "Knowingly concealing the occurrence of any event affecting an initial or continued right under a medical assistance program to have a health care payment made by a health care payer..., "

3 "Knowingly concealing or failing to disclose any information with the intent to obtain a health care payment to which the health care provider... is not entitled, or to obtain a health care payment in an amount greater than what the health care provider... is entitled."

Subsection 191.900.8 defines "knowingly" to mean that the person "has actual knowledge of the information," "acts in deliberate ignorance of the truth or falsity of the information," or "acts in reckless disregard for the truth or falsity of the information."

Subsections 191.905.12 and 14 set out the civil sanctions for violating the statute. Subsection 12 provides the civil penalties for violations of subsections 191.905.1(1-3):

12 "A person who violates subsections 1 to 3 of this section shall be liable for a civil penalty of not less than five thousand dollars and not more than ten thousand dollars for each separate act in violation... plus three times the amount of damages which the state and federal government sustained because of the act of the person."⁵

Finally, subsection 191.905.14 adds:

14 "The attorney general may bring a civil action against any person who shall receive a health care payment as a result of a false statement or false representation of material fact made or caused to be made by that person. That person shall be liable for up to double the amount of all payments received by that person... No civil action provided by this subsection shall be brought if... civil penalties provided by subsection 12... have previously been ordered."

Both subsections 12 and 14 provide the civil penalties for violating the Medicaid Fraud statute. While subsection 191.905.12 cross-references subsections 191.905.1(1-3)—and therefore provides civil penalties for knowing violations of the statute—subsection 191.905.14 provides civil penalties for unintentional violations of the statute.

Subsections 191.905(7-8) set out the criminal sanctions for violations of the statute:

7 "A person who violates subsections 1 to 3 of this section is guilty of a class C felony upon his or her first conviction, and shall be guilty of a class B felony upon his or her second and subsequent convictions..."

8 "Any natural person who willfully prevents, obstructs, misleads, [or] delays... the communication of information or records relating to a violation of sections 191.900 to 191.910 is guilty of a class D felony."

Medicaid Fraud under the Statute

For purposes of this case, the elements of a claim under sec. 191.905.1(1) are as follows: (1) a health care provider must (2) knowingly (3) present a claim for payment that is (4) false. Sec. 191.905.1(1). Spilton does not dispute that she was a licensed health care provider, or that she submitted false claims for reimbursement. She only disputes that she acted knowingly.

Spilton argues that the state was not entitled to judgment as a matter of law. She claims that the trial court erred in granting summary judgment because there is a genuine issue of material fact as to whether she "knowingly" violated sec. 191.905.1(1).⁶

Spilton's Summary Judgment Argument

It is settled Missouri law that the state can rely on circumstantial evidence to demonstrate the "knowing" element of fraud. Farr v. Hoesch, 745 S.W.2d 830, 832 (Mo.App.1988). This is because fraud, by its nature, is very difficult to prove by direct evidence. Allison v. Mildred, 307 S.W.2d 447, 453 (Mo.1957) (stating that fraud claims are "seldom capable of direct proof"). Here, the state set out, in numbered paragraphs, every material fact as to which it claimed there was no genuine issue. And, pursuant to Rule 74.04(c)(1), it made specific references to the record to demonstrate the lack of a genuine issue suitable for trial.

The state included in its motion for summary judgment both circumstantial evidence and direct evidence that Spilton violated sec. 191.905.1(1) 325 separate times. The state produced more than 300 copies of claims submitted by Spilton that stated, among other things, that sh...