U.S. v. Kitsap Physicians Service
| Decision Date | 16 December 2002 |
| Docket Number | No. 01-36089.,01-36089. |
| Citation | 314 F.3d 995 |
| Parties | UNITED STATES of America, Plaintiff, and Alfred Aflatooni, Dr., ex rel, Plaintiff-Appellant, v. KITSAP PHYSICIANS SERVICE, a non-profit Washington corporation; Northwest Diagnostic Imaging, Inc., a Washington professional services corporation; PATHOLOGY Associates of Kitsap County, a Washington Partnership; Ronald Reimer, M.D.; Susan L. Reimer, his wife; Paul S. McCullough, M.D.; Jane Doe McCullough, his wife; Robert C. Schneidler; Sharon K. Schneidler, his wife; Nancy L. Koch; Richard L. Koch, her husband; Keith Hallman, M.D.; Kathleen A. Hallman, his wife; John P. Matan, M.D.; Susan J. Matan, his wife; Thomas C. Case, M.D.; Mary Ann Case, his wife; Milton S. Michaelis, M.D.; Jane Doe Michaelis, his wife; John Doe 1-200; Jane Doe 1-200; Sander E. Bergman, M.D.; Sandra Bergman, his wife, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Cleveland Stockmeyer, Talmadge & Stockmeyer, Tukwila, WA, for the plaintiff-appellant.
Robert G. Homchick, Davis Wright Tremaine LLP, Seattle, WA, for defendants Kitsap Physicians Service and Case.
Steven Y. Koh, Perkins Coie LLP, Seattle, WA, for defendants Estate of Dr. John P. Matan & Susan J. Matan.
David B. Robbins, Bennett Bigelow & Leedom P.S., Seattle, WA, for defendants Pathology Associates of Kitsap County and Hallman.
Appeal from the United States District Court for the Western District of Washington, J. Kelley Arnold, Magistrate Judge, Presiding. VD.C. No. C-96-05003-JKA.
Before: BROWNING, FISHER, and TALLMAN, Circuit Judges.
It seems to be a fairly obvious notion that a False Claims Act suit ought to require a false claim. Yet, the plaintiff-appellant in this case filed his action, proceeded to summary judgment, and prosecuted this appeal without ever seeing or presenting to a court a single false claim submitted by the defendants-appellees. This flaw is fatal to a qui tam1 action under the False Claims Act.
Dr. Alfred Aflatooni appeals the summary judgment dismissal of his False Claims Act lawsuit brought against two physician groups and three doctors. The district court dismissed Aflatooni's action because he failed to produce a single false claim submitted by the defendants. Aflatooni contends that (1) the district court should have given him more time pursuant to Federal Rule of Civil Procedure 56(f) to gather evidence because the defendants engaged in spoliation of the allegedly false documents and (2) the district court erred in entering summary judgment because Aflatooni demonstrated by implication that the defendants must have submitted false medical bills to the government.
The district court did not err by refusing to grant more time under Rule 56(f) where Aflatooni failed to make a Rule 56(f) motion before the summary judgment hearing, as the Rule requires. See Ashton-Tate Corp. v. Ross, 916 F.2d 516, 520 (9th Cir.1990).
The district court also properly granted summary judgment on the merits. To proceed to trial Aflatooni was required — not surprisingly — to present evidence of actual false claims made by the defendants. Because Aflatooni did not point to a single, specific false claim or a sufficiently detailed description of one, he failed to create a triable issue of fact.
We have jurisdiction under 28 U.S.C. § 1291, and we affirm the district court's summary judgment against Aflatooni.
Dr. Aflatooni initiated this action in January 1996, acting as a qui tam relator under the federal False Claims Act, 31 U.S.C. §§ 3729-3733. Aflatooni named multiple defendants, including the appellees in this case: Kitsap Physicians Service ("Kitsap"), Pathology Associates of Kitsap County ("PAKC"), Dr. Hallman, Dr. Case, and Dr. Matan. In addition Aflatooni named Northwest Diagnostic Imaging as a defendant. The government later chose not to intervene.2
Aflatooni alleged that more than ten years earlier, from 1985 through 1987, the defendants submitted false bills to Medicare for medical services provided by defendants. In February 1997, the defendants moved for dismissal due to lack of subject matter jurisdiction. The defendants argued that because any fraud alleged was public knowledge, Aflatooni could not proceed with his qui tam action. The district court dismissed Aflatooni's case on this ground. We reversed the district court as to all the defendants except Northwest Diagnostic Imaging. United States ex rel. Aflatooni v. Kitsap Physicians Services, et al., 163 F.3d 516 (9th Cir.1999). We held that only the allegations as to Northwest Diagnostic Imaging had been publicly disclosed. The case was remanded.
The parties conducted sporadic discovery until the defendants moved for summary judgment on September 6, 2001. The defendants based their motion on (1) Aflatooni's failure to produce evidence of a single false claim and (2) his failure to bring the action within the statute of limitation. The district court heard oral argument on October 17, 2001.
Dr. Aflatooni presented the trial court with limited evidence relating to his claims. He relied almost entirely on a letter from Dr. John P. Matan (now deceased), dated April 8, 1987, and later statements made by the recipient of the letter, Robert Wilson, president of Kitsap. The letter stated in its entirety:
On 4/4/87, I became aware that many of my anatomic pathology billings through [PAKC] have been altered without my knowledge or consent. This was performed by my partner, Dr. Hallman, and has apparently gone on since the inception of [PAKC].
This notice is not to be construed in any way as alleging fraud or any other [illegal] activity by Dr. Hallman nor is it meant to imply a loss to the carrier. This notice is meant to disclaim any knowledge or consent of any possible illegal or unethical activities resulting from this action and to state that the billings for this period under my name do not reflect my personal fee profile or the actual work performed in many instances.
In response to this letter, Kitsap engaged attorney John Guadnola to conduct an internal investigation. Guadnola testified on deposition that his investigation was free from influence by Kitsap and individual doctors, and Guadnola selected without interference nearly 1,000 medical records to review for improper billing. Guadnola concluded that "there was no fraud," that all adjustments to bills were appropriate, and that the general trend of any adjustments was to reduce the amount claimed in the bill. For example, Guadnola found that of the 523 November 1985 bills he reviewed, there were only two occasions in which the bill upwardly adjusted the number of slides reviewed by a pathologist and there were at least fifty downward adjustments.
Aflatooni argues on appeal that the entire Guadnola investigation was a sham, based on a 1997 declaration of a healthcare administrator, an expert whom Aflatooni engaged to assess the propriety of the investigation. However, because Aflatooni failed to present this evidence to the district court in opposition to the motion for summary judgment, either in his written briefs and affidavits or at the summary judgment hearing, he has waived this argument on appeal. See, e.g., Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir.2001) () (quotation omitted); Peterson v. Highland Music, Inc., 140 F.3d 1313, 1321 (9th Cir.1998) ().
Aflatooni did present to the district court a memo written by Wilson after receiving Matan's April 1987 letter. Wilson met with Matan at that time, and Matan indicated to Wilson that PAKC submitted about 10,000 bills a year, any of which could have been altered without Matan's knowledge. Aflatooni also claimed that Wilson later personally told him that about a quarter of the 10,000 bills a year may have been altered to receive more compensation.
Dr. Keith Hallman, the physician who allegedly altered Matan's bills to defraud Medicare, testified on deposition that Hallman reviewed Matan's bills in accordance with Hallman's role as managing partner and exercised his reasonable professional judgment to sometimes adjust Matan's bills. Hallman also swore that "I have never knowingly billed for services that were not provided or inaccurately identified services to be billed."
Aflatooni also contends on appeal that he presented sufficient evidence of fraud committed by Northwest Diagnostic Imaging, the party that was dismissed from the case in 1997 on jurisdictional grounds. Aflatooni alleged that Northwest Diagnostic Imaging was forced to pay a penalty of around $150,000 for overcharging Medicare. Northwest Diagnostic Imaging was controlled by Kitsap, which also controls PAKC. Aflatooni argues on appeal that he has therefore established a pattern of fraud by Kitsap that also extends to PAKC. Aflatooni's urging of this evidence for the first time on appeal cannot create a triable issue of fact because he failed to articulate this evidence to the district court in opposition to the summary judgment motion. See Carmen, 237 F.3d at 1029; Peterson, 140 F.3d at 1321.
At the October 17, 2001, summary judgment hearing, Aflatooni raised the issue of evidence spoliation and requested that an evidentiary hearing be conducted on that issue. At no point did Aflatooni make a Rule 56(f) motion, orally or in writing, or file a supporting affidavit explaining why additional time for discovery was needed to respond to the summary judgment motion.
The district court granted defendants' motion and dismissed Aflatooni's case. The court found that Aflatooni presented "no evidence to support the claim that defendants filed a single claim in violation of the False Claims Act." The...
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