United States ex rel. Rockey v. Ear Inst. of Chi., LLC

• Decision Date: 25 March 2015
• Docket Number: 11 C 7258
• Citation: 92 F.Supp.3d 804
• Parties: United States of America ex rel. Holly A. Rockey, Relator/Plaintiff, v. Ear Institute of Chicago, LLC, Richard J. Wiet, Robert A. Battista, Arvind Kumar, Mark Wiet, Vasilike Rauch, Kathleen Highhouse, Jill Brodinski, Krystine Mullins, Carly Williams, Our Billing Department, Inc., d/b/a Trellis Health Billing, and Chicago Otology Group, LLC, Defendants.
• Court: U.S. District Court — Northern District of Illinois

92 F.Supp.3d 804

United States of America ex rel. Holly A. Rockey, Relator/Plaintiff
v.
Ear Institute of Chicago, LLC, Richard J. Wiet, Robert A. Battista, Arvind Kumar, Mark Wiet, Vasilike Rauch, Kathleen Highhouse, Jill Brodinski, Krystine Mullins, Carly Williams, Our Billing Department, Inc., d/b/a Trellis Health Billing, and Chicago Otology Group, LLC, Defendants.

11 C 7258

United States District Court, N.D. Illinois, Eastern Division.

Signed March 25, 2015

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Michael Irving Leonard, Ethan Emery White, Leonardmeyer LLP, Jonathan D. Lichterman, Meckler Bulger Tilson Marick & Pearson LLP, Chicago, IL, for Relator/Plaintiff.

M. David Weisman, Gabriel Bankier Plotkin, Miller Shakman & Beem LLP, Mark W. Bina, Laura T. Macdonald, Quarles & Brady LLP, Charles G.F. Mackelvie, Krieg Devault LLP, Chicago, IL, for Defendants.

Memorandum Opinion and Order

GARY FEINERMAN, United States District Judge

Having uncovered what she believed to be Medicare fraud, Holly Rockey brought

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this qui tam suit against her former employer and all nine of its doctors and audiologists (collectively, “Ear Institute Defendants”), as well as its billing contractor (“Trellis”), under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. Doc. 102. Rockey also claims that the Ear Institute and its doctors fired her in retaliation for having exposed the alleged fraud, in violation of the FCA and Illinois law. Ibid. Eighteen months after Rockey filed this suit, the United States declined to intervene and the Chief Judge unsealed the complaint. Docs. 11–13. Months later, Rockey sought and obtained leave to file an amended complaint. Docs. 45, 48–49. Faced with a motion to dismiss, Doc. 62, Rockey sought and obtained leave to file a second amended complaint, Docs. 80, 83, 86, 102. In allowing Rockey to file the second amended complaint, the court stated on the record that it would be Rockey's last chance to amend.

Ear Institute Defendants and Trellis have separately moved under Federal Rule of Civil Procedure 12(b) to dismiss the second amended complaint. Docs. 103, 105. Trellis's motion is granted, while Ear Institute Defendants' motion is granted in part and denied in part.

Background

On a motion to dismiss under Rule 12(b)(6), the court must accept the operative complaint's well-pleaded factual allegations, with all reasonable inferences drawn in Rockey's favor, but not its legal conclusions. See Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir.2012). The court must also consider “documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice,” along with additional facts set forth in Rockey's briefs opposing dismissal, so long as those additional facts “are consistent with the pleadings.” Geinosky v. City of Chicago, 675 F.3d 743, 745 n. 1 (7th Cir.2012). The facts are set forth as favorably to Rockey as those materials permit. See Gomez v. Randle, 680 F.3d 859, 864 (7th Cir.2012).

The Ear Institute employs several physicians and audiologists who “diagnos[e] and treat[ ] disorders of the ear, facial nerves, and related structures.” Doc. 102 at ¶ 1. Many of its patients are eligible for Medicare. Id. at ¶ 63. From April 2010 until her termination in November 2010, Rockey worked as a “medical biller and coder” at the Ear Institute. Id. at ¶ 5. Among Rockey's duties was to enter data, including Medicare billing codes, into patient claims forms stored in “eClinical,” the Ear Institute's electronic medical records system. Id. at ¶¶ 44–45. Each evening the Ear Institute's billing contractor, Our Billing Department, Inc., d/b/a Trellis Health Billing, downloaded the information from eClinical and prepared official claims forms (either “CMS 1500” paper forms or their electronic equivalents) for submission to Medicare for reimbursement. Id. at ¶¶ 25, 51.

The eClinical forms had several fields, including “Servicing Provider” and “Rendering Provider.” Id. at ¶ 42. During Rockey's tenure at the Ear Institute, if an audiologist performed services for a patient, he would enter his own name in both fields, but before releasing the data to Trellis for submission to Medicare, Rockey would—per Ear Institute Defendants' instructions—change the “Rendering Provider” from the name of the audiologist to that of a physician, even if the physician had not performed any service listed on the form. Id. at ¶¶ 43–47. Trellis then would download from eClinical only the name of the Rendering Provider, not the Servicing Provider, and so only the physician's name and National Provider Identification number (“NPI”) would appear on the forms Trellis submitted to Medicare on

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the Ear Institute's behalf. Id. at ¶ 51. In fact, the Ear Institute's audiologists had not even enrolled as Medicare providers, and so did not have their own NPIs, despite a Medicare regulation stating that “[a]udiologists must be enrolled and use their NPI on claims for services they render in office settings on or after October 1, 2008....” Centers for Medicare & Medicaid Services, Medicare Claims Processing Manual, Pub. 100–04, at ch. 12, § 30–3(A)(2); see Doc. 102 at ¶¶ 36, 51.

To be reimbursable, medical services for eligible patients ordinarily must be furnished by a physician or, if by a non-physician, “under [an] appropriate level of supervision by a physician.” 42 C.F.R. § 410.32 ; see Doc. 102 at ¶ 29. Medicare does, however, cover diagnostic audiology services “personally furnished by a qualified audiologist” even without physician supervision—albeit with some limitations. Centers for Medicare & Medicaid Services, Medicare Benefit Policy Manual, Pub. 100–02, at ch. 15, § 80.3(A); see Doc. 102 at ¶ 29; 42 C.F.R. § 410.32(b)(2)(ii). One limitation is that a physician must order the service; diagnostic audiology services “performed by an audiologist without a physician order ... are not covered.” Medicare Benefit Policy Manual,supra, at ch. 15, § 80.3(B); see Doc. 102 at ¶ 91. In addition, “[t]here is no provision in the law for Medicare to pay audiologists for therapeutic services,” as distinct from diagnostic services, even though some therapeutic services may be covered if administered directly by a physician. Medicare Benefit Policy Manual, supra, at ch. 15, § 80.3(F); see Doc. 102 at ¶ 30. Not only did the Ear Institute regularly present reimbursement claims to Medicare for services rendered by an audiologist using a physician's name and NPI, but some of those services were either therapeutic services or performed without a physician order—meaning that but for the false listing of the physician's NPI, Medicare would not have reimbursed the Ear Institute for the services. Doc. 102 at ¶¶ 53, 69, 72–76, 97–98.

Sometime in Summer 2010, Rockey told a Trellis employee that, on Ear Institute Defendants' instructions, she had been changing the names in the Rendering Provider field on claims forms from that of the treating audiologist to that of a physician. Id. at ¶¶ 58–59. The Trellis employee said that Trellis “was unaware that such changes had been made and that any such changes were in fact improper.” Id. at ¶ 59.

In an October 26, 2010 office meeting, Rockey alerted Ear Institute Defendants to their improper billing practices. Id. at ¶ 102. Ear Institute Defendants “acknowledged and admitted to [Rockey] that they were well aware that their actions were improper,” yet “instructed and directed [her] to continue submitting ... claims in this manner,” ibid. and to train another employee to do the same, id. at ¶ 104–05. Ear Institute Defendants told Rockey that they had adopted that billing approach “at the suggestion of their accountant because it would allow them to collect more money from Medicare.” Id. at ¶ 102. On October 28, two days after the meeting, Rockey sent an email to Ear Institute Defendants “again outlining the proper and lawful procedure for billing Medicare for audiology services.” Id. at ¶ 103; see Doc. 102–5 at 14 (copy of the email, which is attached to the complaint). In the email, Rockey reiterated that “[a]ny test that is performed by an audiologist ... has to be billed under their own NPI and can not [sic] be billed under the physician,” but also noted that “[p]ayment will not differen [t]iate from prior payments as[ ] long as all audiologist[s] are set up and credentialed correctly with [M]edicare at [the] time of service.” Doc. 102–5 at 14.

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On November 30, 2010, one of the Ear Institute's physicians, Richard J. Wiet, sent a letter to Medicare (actually to a private Medicare contractor, Wisconsin Physicians Service Insurance Corporation (“WPS Medicare”), but the parties agree that this wrinkle is immaterial) stating:

We recently became aware that our audiologists were to enroll in Medicare as of October 1, 2008 and that bills for the audiologists' services should have identified their NPIs....

While we realize that the claims we have submitted for the audiologists' services since October 1, 2008 should have been submitted under the audiologists' NPIs, we do not believe that payment of

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