U.S. v. Prabhu, 2:04-CV-0589-RCJ-LRL.

• Decision Date: 20 July 2006
• Docket Number: No. 2:04-CV-0589-RCJ-LRL.,2:04-CV-0589-RCJ-LRL.
• Citation: 442 F.Supp.2d 1008
• Parties: UNITED STATES of America, Plaintiff, v. R.D. PRABHU, M.D. and R.D. Prabhu-Lata Shete, M.D.'s, Ltd., Defendants.
• Court: U.S. District Court — District of Nevada

442 F.Supp.2d 1008

UNITED STATES of America, Plaintiff, v. R.D. PRABHU, M.D. and R.D. Prabhu-Lata Shete, M.D.'s, Ltd., Defendants.

No. 2:04-CV-0589-RCJ-LRL.

United States District Court, D. Nevada.

July 20, 2006.

COPYRIGHT MATERIAL OMITTED

Roger W. Wenthe, U.S. Attorney's Office, Las Vegas, NV, for Plaintiff.

C. Stanley Hunterton, Samuel B. Benham, Hunterton & Associates, Las Vegas, NV, Robert Salcido, Pro Hac Vice, Akin Gump Strauss Hauer & Feld LLP, Washington, DC, for Defendants.

ORDER

ROBERT C. JONES, District Judge.

THIS MATTER is before the Court on Defendants' Motion for Summary Judgment on the Government's Claims that Defendants' Simple Pulmonary Stress Tests Violated the False Claims Act (# 40), Defendants' Motion for Summary Judgment on the Government's Claims that Defendants' Medical Services were not Medically Necessary and Indicated (# 41), and Defendants' Motion for Summary Judgment to Dismiss the Government's Claim that Defendants Were Unjustly Enriched (# 42), all filed on November 9, 2005. A hearing on these motions was held on February 27, 2006. After extensive review of the record,¹ applicable law, and argument of the parties, I find that the Defendants' motion for Summary Judgment on the Government's claims that the Defendants violated the False Claims Act (# 40, # 41) should be GRANTED, and that the Defendants' motion for Summary Judgment regarding the Government's unjust enrichment claims (# 42) should also be GRANTED.

FINDINGS OF FACT

Introduction

1. In this False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3733 (2003), action, the Government alleged that Defendants R.D. Prabhu, M.D. and R.D. Prabhu-Lata Shete, M.D.'s, Ltd., knowingly submitted false claims to the Government by billing for simple pulmonary stress tests (monitored exercise in a structured setting to evaluate the patient's condition) when performed as part of a pulmonary rehabilitation program. See First Am. Compl. ¶ 13. Defendant R.D. Prabhu, M.D. ("Dr.Prabhu") is a Board Certified physician in both Pulmonary and Internal Medicine. Defendant R.D. Prabhu-Lata Shete, M.D.'s, Ltd. is Dr. Prabhu's medical practice which is located at the Red Rock Medical Center in Las Vegas, Nevada.

2. On May 6, 2004, the Government filed its initial complaint against Dr. Prabhu. See Gov. Compl. In the complaint, the Government alleged that during the relevant time period, from January 1, 1998 to February 2, 2004, pulmonary rehabilitation, which consists of physical exercises by the patient to increase the functional capacity of the patient's lungs, was not a covered benefit under Medicare. See Gov. Compl. ¶ 13. The Government further contended that Dr. Prabhu, knowing that pulmonary rehabilitation was not covered under Medicare, unlawfully billed for a simple pulmonary stress test, under CPT 94620, instead.² Id. at ¶ 16.

3. In February 2005, the Government filed its first amended complaint. See First Am. Compl. In this complaint, the Government included two additional allegations to its initial contentions that Dr. Prabhu breached the FCA because he billed for CPT 94620 when he provided non-covered pulmonary rehabilitation services. First, the Government alleged that Dr. Prabhu did not appropriately bill for a simple pulmonary stress test under Code 94620, because a physician could only bill for this code if he performed a pre and post-exercise spirometry and also prepared a written physician report interpreting the results of these services. See First Am. Compl. ¶ 13. Second, the Government contended that Dr. Prabhu failed to properly document the medical necessity of services to some of his patients. First Am. Compl. ¶ 14.

4. The Amended Complaint finally contended that Dr. Prabhu had been unjustly enriched by his allegedly unlawful behavior. Id. ¶ 25.

Regulatory Background Regarding Services In Dispute

Pulmonary Rehabilitation Services

5. There are two basic services that frame the dispute underlying the Government's lawsuit: pulmonary rehabilitation services³ and simple pulmonary stress tests. "Pulmonary rehabilitation," in essence, is a term of art that includes a number of health related programs and procedures, all of which are designed to increase a patient's pulmonary strength that, in turn, will improve the patient's quality of life and reduce the amount of medical resources needed to treat the patient's pulmonary disease. See Pulmonary Rehabilitation, 112 CHEST 1363 at 1364. Although each pulmonary rehabilitation program varies depending upon a patient's specific needs, each program will typically include exercise, education, and monitoring the patient's response to the program. See, e.g., Memorandum from Kathleen A. Buto, Deputy Director, Center for Health Plans and Providers to Director, Office of Clinical Standards and Quality, Def. FCA Mem. Ex. 4.

6. Medicare has long considered pulmonary rehabilitation programs to be a covered service under the "incident to physician services" clause of the Medicare Act, 42 U.S.C. § 1395(x) (2003). In 1981, the Health Care Financing Administration (now known as the Centers for Medicare and Medicaid Services ("CMS")) Office of Coverage Policy stated that pulmonary rehabilitation services were in fact a covered Medicare service as long as the "reasonable and necessary" provisions indicative of all Medicare coverage are met. See American Association of Cardiovascular and Pulmonary Rehabilitation, Cardiac and Pulmonary Issue Paper: Cardiac & Pulmonary Rehabilitation Services, Def. FCA Mem. Ex. 5.

7. Various Medicare publications also demonstrate that pulmonary rehabilitation has long been an integral part of the diagnosis and treatment of pulmonary disease. See, e.g., CMS Outpatient Physical Therapy Manual § 253.5A, Def. FCA Mem. Ex. 6; CMS Skilled Nursing Facility Manual 230.1 0C, Def. FCA Mem. Ex. 7.

8. In 1980, Congress established Comprehensive Outpatient Rehabilitation Facilities ("CORFs") as legitimate providers of rehabilitation services to Medicare beneficiaries. See Pub.L. No. 96-499, § 933, 94 Stat. 2609, 2637 (1980); see also Nat'l Ass'n of Rehab. Facilities, Inc. v. Schweiker, 550 F.Supp. 357 (D.D.C.1982) (describing legislation). Congress identified pulmonary rehabilitation as one of those covered services. Moreover, consistent with the notion that Medicare has always covered pulmonary rehabilitation and/or its component parts, the Government elected to incorporate pulmonary rehabilitation into the National Emphysema Treatment Trial ("NETT"), a joint National Institute of Health ("NIH") and CMS effort to study lung volume reduction surgery which began on August 1, 1997. See Medicare Carrier Manual § 4900. 1, Def. FCA Mem. Ex. 8. Medicare would only cover services that were integral to the NETT study and "[n]ot prohibited from coverage by Medicare statute." Id. § 4900.2. Because pulmonary rehabilitation was considered a covered service at that time, CMS elected to reimburse pulmonary rehabilitation services under the trial. Id.

9. From 1981-2000, Medicare generally continued to pay for pulmonary rehabilitation services, especially when enunciated through fiscal intermediary Local Medical Review Policies ("LMRPs").⁴ These LMRPs generally provided guidance to hospital outpatient departments that provided pulmonary rehabilitation services, outlining covered services, appropriate qualifying diagnoses and billing procedures. See Def. FCA Mem. Ex. 9.

10. Also, during this time period, some carriers permitted coverage for pulmonary rehabilitation by designating a specific code under which the component parts of pulmonary rehabilitation could be "bundled" into a single code.⁵

11. In 1998, the pulmonary medicine community (American College of Chest Physicians, American Thoracic Society, National Association for Medical Direction of Respiratory Care, American Association of Cardiovascular and Pulmonary Rehabilitation) began vigorous pursuit of the establishment of a national coverage policy for pulmonary rehabilitation to eliminate the differences among the various LMRPs that, in effect, provided different services for different Medicare beneficiaries. See Def. FCA Mem. Ex. 5.

12. In March, 2000, CMS circulated a memorandum to fiscal intermediaries that declared that there is no true benefit category for pulmonary rehabilitation programs. At the same time, CMS continued to assert that component parts of pulmonary rehabilitation programs may be appropriately billed under some circumstances:

In some instances, Medicare may make payment under separate benefits for certain individual services such as certain physical or occupational therapy services that could be reasonable and necessary, assuming all other coverage criteria for physical or occupational therapy services were met. Some other services defined as components of pulmonary rehabilitation could be considered physician evaluation and management services under existing codes for physician services.

Memorandum from Kathleen A. Buto, Deputy Director, Center for Health Plans and Providers to Director, Office of Clinical Standards and Quality (Mar. 3, 2000). See Def. FCA Mem. Ex. 4.

13. Consistent with this CMS pronouncement, some carriers began to revise their policies to clarify that although pulmonary rehabilitation may no longer be covered, its component services may be covered. For example, on April 2, 2001, Empire deleted its May 2, 1998, LMRP, see supra note 5, and informed its regional providers that they should no longer use 94799 to bill for pulmonary rehabilitation, but listed fifteen other codes as "some" of the codes that providers could use to bill for the "components of pulmonary rehabilitation which represent the actual service[s] rendered." See Medicare News Brief— New Jersey at 3 (Apr.2001), Def. FCA Mem. Ex. 13.

14. Moreover, consistent with the Government's recognition that pulmonary rehabilitation was medically necessary and appropriate, in late 2001, CMS published, as part of its hospital outpatient...