United States ex rel. Janssen v. Lawrence Mem'l Hosp.

• Decision Date: 07 February 2020
• Docket Number: No. 19-3011,19-3011
• Citation: 949 F.3d 533
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: UNITED STATES of America, EX REL. Stacey L. JANSSEN, as Special Administrator of the Estate of Megen Corin Duffy, Plaintiff Counter Defendant - Appellant, v. LAWRENCE MEMORIAL HOSPITAL, Defendant - Appellee.

949 F.3d 533

UNITED STATES of America, EX REL. Stacey L. JANSSEN, as Special Administrator of the Estate of Megen Corin Duffy, Plaintiff Counter Defendant - Appellant,

v.LAWRENCE MEMORIAL HOSPITAL, Defendant - Appellee.

No. 19-3011

United States Court of Appeals, Tenth Circuit.

FILED February 7, 2020

Anthony E. LaCroix, LaCroix Law Firm, LLC (Theodore J. Lickteig, Law Office of Theodore J. Lickteig, Lenexa, Kansas, Sarah A. Brown, Brown and Curry, LLC, Kansas City, Missouri, and Robert K. Collins, Collins Law Office, LLC, Olathe, Kansas, with him on the briefs), Kansas City, Missouri, for Appellant.

Andrew W. Lester (Mark A. Cole, Andrew R. Ramirez, and Kathryn G. Lee, with him on the brief), Spencer Fane LLP, Overland Park, Kansas, for Appellee.

Before TYMKOVICH, Chief Judge, MURPHY, and CARSON, Circuit Judges.

TYMKOVICH, Chief Judge.

In this False Claims Act case, Stacey Janssen alleges Lawrence Memorial Hospital engaged in two healthcare schemes to fraudulently receive money from the United States. Janssen first contends LMH falsified patients’ arrival times in order to increase its Medicare reimbursement under certain pay-for-reporting and pay-for-performance programs the Government uses to study and improve hospitals’ quality of care. Next, Janssen contends LMH falsely certified compliance with the Deficit Reduction Act in order to receive Medicare reimbursements to which it was otherwise not entitled.

LMH moved for summary judgment below, arguing Janssen failed to show her allegations satisfied the Act’s materiality requirement—that the alleged falsehoods influenced the Government’s payment decision as required under the FCA. The district court granted LMH summary judgment on all of Janssen’s claims on this basis, and we AFFIRM.

I. Background

We first explain the fraud schemes alleged in the complaint and then discuss the procedural background relevant to the legal issues on appeal.

A. LMH’s Alleged Fraud Schemes

Janssen claims LMH engaged in two fraudulent schemes. The first concerns LMH’s alleged falsification of patients’ arrival times. The second centers on LMH’s false certification of compliance with the Deficit Reduction Act.

1. Falsification of Patients’ Arrival Times

LMH contracts with the Centers for Medicare and Medicaid Services (CMS) to provide services to Medicare patients. CMS pays LMH for services based on pre-determined rates. These rates are affected by certain programs, including the Inpatient Quality Reporting (IQR) program, the Outpatient Quality Reporting (OQR) program, and the Hospital Value Based Purchasing (HVBP) program. To varying degrees, each of these programs rely on measures that incorporate patients’ arrival times. The arrival time data is considered because it helps the Government analyze the timeliness of the care patients receive.

a. The IQR, OQR, and HVBP Programs

The IQR program is a pay-for-reporting program. Under this program, hospitals report certain designated quality measures regarding inpatient care. In exchange for timely and accurately reporting, hospitals receive an annual increase—what is termed a "market basket index increase"—in the rate at which they are reimbursed under Medicare. See 42 C.F.R. § 412.64. Those hospitals that fail to submit accurate data on a timely basis have their market basket index increase reduced.¹ Id. at (d)(2).

The OQR program operates similarly to the IQR program, except it relates to outpatient, as opposed to inpatient, care. Hospitals must report certain quality measures regarding outpatient care under the program. In exchange for accurate and timely data, hospitals protect their annual market basket index increase from reduction.

For both the IQR and OQR programs, LMH understands that submitting accurate and complete data was a condition of receiving its full market basket index increase. For the IQR program, LMH also submits Data Accuracy and Completeness Acknowledgments on an annual basis certifying that the data submitted is "accurate and complete." App. at 2608.

The HVBP program is a pay-for-performance program. It operates as an incentive program based on hospitals’ relative performance on a subset of IQR measures. Unlike the IQR and OQR programs—which reward the mere submission of data to CMS without regard for the substantive content of that data—the HVBP program considers how well or poorly hospitals performed compared to their peers. Under this program, CMS withholds a percentage from the total annual Medicare payments due to all participating hospitals and redistributes these funds according to each hospital’s performance score. A hospital’s performance score is calculated based on four different domains. Each domain has a number of different measures within it. Accordingly, during the relevant time period, LMH’s performance on certain IQR measures affected its overall HVBP performance score, which in turn impacted its Medicare reimbursement rate.

The healthcare measures used in the IQR, OQR, and HVBP programs change from year to year. During the relevant period some, but not all, of these measures incorporated patients’ arrival times. For example, the only measures in the HVBP program that incorporated arrival times were AMI-7a (fribrinolytic therapy received within 30 minutes of hospital arrival) and AMI-8a (primary surgical intervention received within 90 minutes of hospital arrival). In fiscal year 2015, these constituted two out of twelve measures contributing to LMH’s Clinical Process of Care Domain score—one of four domain scores that contributed to LMH’s overall HVBP performance score. Similarly, of the measures utilized by the IQR and OQR programs, only a subset include arrival times.² Moreover, for certain periods, LMH did not report any data for even those measures that incorporate arrival times.³

LMH reports data for the IQR and OQR programs to CMS either through automatically generated reports or by "abstracting" the data from patient charts. Abstraction is performed using Specifications Manuals promulgated by CMS. Abstractors do not, and cannot, alter data or patient records, nor do they investigate the accuracy of the data. Thus, for both forms of reporting, any inaccuracies in patients’ records are simply carried over to the data reported to CMS.

b. Reporting False Patient Arrival Times

Under the IQR and OQR programs, LMH must report a patient’s arrival time as the earliest time shown among a variety of documentation, including the patient’s triage record or emergency department fact sheets.⁴ As the district court notes in its order granting summary judgment, numerous pieces of evidence in the record support the contention that "LMH knowingly falsified patient records with the intent of causing abstracted ‘arrival times’ to be later than they would have been absent the falsification." App. at 3641.

For example, the former director of LMH’s Emergency Department testified that LMH used "interim forms" and "triage sheets" to record patient arrival times but later discarded these forms so that the recorded arrival times did not enter the patient’s hospital record. App. at 814–16. A former registration clerk in LMH’s Emergency Department also declared that she was trained and instructed to delay registration of patients until after the administration of electrocardiograms

(EKGs) so that the arrival time on the patient’s record was synonymous with their EKG time. She also declared that LMH altered patients’ arrival times to match EKG times in order to obtain Medicare compensation. Id. at 1369.

Certain statistics are consistent with these assertions. Between 2010 and 2017, LMH reported a total of 17,714 records that incorporated "arrival time" as part of the IQR program. App. at 2606. For 15.89% of these records, the patient’s arrival time was either the same as or later than a recorded EKG time. Id. During the same period, LMH reported 8,672 records to CMS that incorporated arrival time as part of the OQR program. Id. Of these, 4.09% contained an arrival time that was either the same as or later than a recorded EKG time. Id. Moreover, from the second quarter of 2008 through the last quarter of 2010, LMH frequently reported a median arrival-to-EKG time of more than eight minutes and never reported a time below three minutes. Id. at 948. But beginning in the first quarter of 2011, LMH began frequently reporting a median arrival-to-EKG time of zero or one minute. Id.

A reasonable inference from this testimonial and statistical evidence is that LMH falsified certain patient arrival times and reported some inaccuracies to CMS through the IQR and OQR programs. But the record is silent as to the extent LMH’s alleged falsification of arrival times affected the accuracy of its IQR and OQR reporting or its HVBP performance score.⁵

2. False Certification of Compliance with the Deficit Reduction Act

As a condition of receiving more than $5 million each year from Medicare, LMH must comply with Section 6032 of the Deficit Reduction Act. Section 6032 requires LMH to educate its employees with detailed information regarding the False Claims Act. See 42 U.S.C. § 1396a(a)(68). Among other things, Section 6032 requires that "any employee handbook" include "specific discussion" of "detailed information about the False Claims Act ... administrative remedies for false claims and statements ... any State laws pertaining to civil or criminal penalties for false claims and statements, and whistleblower protections under such laws, with respect to the role of such laws in preventing and detecting fraud, waste, and abuse in Federal health care programs ...." Id.

From 2007 to 2016, LMH’s New Associate Resource Handbooks lacked detailed discussion of the FCA, although these sources were supplemented with additional training and informational materials.

LMH also signed Attestations of Compliance for at least fiscal years ending September 30, 2014 through 2017. Each attestation states that "as a condition for receiving payments exceeding $5 million per...