United States ex rel. Presser v. Acacia Mental Health Clinic, LLC

• Decision Date: 01 September 2016
• Docket Number: No. 14-2804,14-2804
• Citation: 836 F.3d 770
• Parties: United States of America and the State of Wisconsin, ex rel. Rose Presser, Plaintiff–Appellant, v. Acacia Mental Health Clinic, LLC, and Abe Freund, Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

836 F.3d 770

United States of America and the State of Wisconsin, ex rel. Rose Presser, Plaintiff–Appellant,

v.Acacia Mental Health Clinic, LLC, and Abe Freund, Defendants–Appellees.

No. 14-2804

United States Court of Appeals, Seventh Circuit.

Argued April 6, 2016

Decided September 1, 2016

Kathryn A. Keppel, Patrick J. Knight, Attorneys, Gimbel, Reilly, Guerin & Brown LLP, Milwaukee, WI, for Plaintiff–Appellant Rose Presser.

Stacy C. Gerber Ward, Attorney, Office of the United States Attorney, Milwaukee, WI, for Plaintiff United States of America.

Thomas L. Storm, Attorney, Office of the Attorney General, Wisconsin Department of Justice, Madison, WI, for Plaintiff State of Wisconsin.

Patrick Coffey, Andrew A. Jones, Attorneys, Husch Blackwell LLP, Milwaukee, WI, for Defendants–Appellees.

Before Flaum, Ripple, and Hamilton, Circuit Judges.

Ripple

, Circuit Judge.

Relator and plaintiff Rose Presser filed a qui tam action under the False Claims Act, 31 U.S.C. § 3729 et seq.

(“FCA”), and its Wisconsin analog, the Wisconsin False Claims Act, Wis. Stat. § 20.931 et seq. (“WFCA”),¹ on behalf of the United States and the State of Wisconsin against defendants Acacia Mental Health Clinic, LLC (“Acacia”) and Abe Freund, the principal owner of Acacia. Ms. Presser alleges that Acacia and Mr. Freund engaged in “upcoding,” provided unnecessary medical procedures, and then charged the federal and state governments for those expenses. The district court granted the defendants' motion to dismiss the complaint for failure to state a claim of fraud with particularity as required by Federal Rule of Civil Procedure 9(b). We affirm that judgment except as it relates to the claims against both defendants regarding the use of an improper billing code. We hold that Ms. Presser has stated those allegations with sufficient particularity and therefore reverse the district court's judgment on those claims and remand for further proceedings.

I BACKGROUND

A. Facts

Ms. Presser has twenty years of experience working as both a nurse and a nurse practitioner in the State of Wisconsin. In October 2011, Ms. Presser began working with Acacia as an independent contractor nurse practitioner. She provided psychiatric evaluations, managed patient medication, and provided other medical services. In her complaint, Ms. Presser alleges that Acacia was engaged in the following practices and policies.

First, Acacia mandated that patients be assessed by a minimum of four different individuals before they were provided with medication. Patients were required to see a receptionist, a medical nurse practitioner (who could not conduct medical examinations but did provide acupuncture

and similar treatments), a psychotherapist, and then a nurse practitioner. Patients incurred separate charges for each of these four steps. Ms. Presser alleges that, “[b]ased on [her] years of experience and training, Acacia's four-step policy was not medically necessary.”²

Second, the clinic manager directed Ms. Presser to utilize American Medical Association Current Procedural Terminology code 90801 when billing her assessments. The receptionist and the medical nurse practitioner used this same billing code for their encounters with the patient. This “code is applied to ... a full psychological assessment by a therapist (or therapist in training), or a psychiatric medical evaluation by a psychiatrist or psychiatric nurse practitioner, the type of assessment [Ms.] Presser was expressly told to discontinue conducting.”³ Ms. Presser asked the clinic manager why billing code 90801 was being used by receptionists, medical nurse practitioners, and nurse practitioners. The clinic manager shrugged his shoulders in response.

Third, patients were required to undergo a mandatory urine drug screening

during each visit. Each of these screenings was billed. The clinic manager told Ms. Presser that the tests allowed Acacia to determine whether patients were taking their medication. Ms. Presser alleges, “[b]ased on her personal knowledge and experience,” that “the policy made no sense as the screenings would not establish when the patients took their medications and whether they were taking them at the proper times.”⁴

Fourth, both Mr. Freund and the clinic director told the clinic staff that patients were required to come to the clinic in person in order to obtain a prescription refill or to speak with a physician. Patients regularly told Ms. Presser that they had called to speak with her over the phone, but were told by the receptionist that they needed to come to Acacia in person. If a patient missed an appointment or was not seen for a period as short as thirty days, he or she was discharged and would need to restart the assessment process. Before obtaining a new prescription, patients were required to see a psychotherapist at the clinic. Patients were billed for these encounters. “Based on [Ms.] Presser's years of experience and training,” Ms. Presser alleges that these prescription refill and appointment policies “were medically unnecessary.”⁵

In her complaint, Ms. Presser provided examples of what she believed to be “unnecessary medical billings.”⁶ John Doe 1 and Jane Doe 2 saw Ms. Presser for treatment of anxiety disorders during Ms. Presser's previous tenure at Aurora Behavioral Health.⁷ In her “clinical judgment,” neither patient was an “appropriate candidate for psychotherapy.”⁸ Ms. Presser had similar opinions about John Doe 2 and Jane Doe 1, whom she also saw for medication.⁹ The clinic manager and Mr. Freund nonetheless directed that all four individuals undergo the assessment process established by Acacia, which included psychotherapy.

Before Ms. Presser began working at Acacia, Mr. Freund told her “that Acacia could take all insurance.”¹⁰ Mr. “Freund also told [Ms.] Presser that almost all of Acacia's patients were ‘on Title 19.’ ”¹¹ According to the amended complaint:

Based on those discussions, as well as her experience at other clinics, she knew that Acacia submitted bills to individual patients, to private insurers, and to Medicare and Medicaid programs run by the United States and the State of Wisconsin for services provided to patients, subject to their individual circumstances. She also knew those bills were based on services provided to patients, as coded by Acacia staff, in accordance with Acacia's mandatory policies and procedures discussed above.^{[12 ]}

Ms. Presser calculated what she believed to be the appropriate annual revenue for Acacia, “[b]ased on her experience and her knowledge of the patient volume and activity at Acacia.”¹³ Actual revenue for 2011 was double Ms. Presser's calculation.

Ms. Presser and other clinicians questioned the efficacy of the aforementioned procedures, but the clinic director told them that “[t]his is how Abe [Freund] wants it.”¹⁴ When Ms. Presser sent emails that questioned procedures, Mr. Freund would respond, even when those emails were not addressed to him. He also had cameras in the office and could monitor the treatment being provided. According to the complaint, he therefore “knew that Acacia was billing Medicare and Medicaid for all services provided by the staff at Acacia, including services that Acacia's clinical staff told him were not medically necessary or contrary to protocols and procedures established by Medicare and/or Medicaid.”¹⁵ He nevertheless continued to direct staff to comply with these policies.

B. Earlier Proceedings

Ms. Presser filed a qui tam complaint on January 18, 2013, under the FCA and the WFCA on behalf of the United States and the State of Wisconsin against Acacia and Mr. Freund. She alleged that they had submitted fraudulent medical bills to the federal and state governments for payment.¹⁶

Acacia and Mr. Freund moved to dismiss the complaint on December 18, 2013, contending that Ms. Presser had not pleaded a single claim with sufficient particularity. Ms. Presser then moved to amend her complaint. The district court granted that motion and ordered Ms. Presser to “mak[e] any and all improvements she deems appropriate; no further leave to amend will be granted.”¹⁷ Ms. Presser subsequently filed an amended complaint.

Acacia and Mr. Freund moved to dismiss the amended complaint on April 11, 2014. They contended that Ms. Presser had failed to plead the FCA and WFCA claims with sufficient particularity, as required by Federal Rule of Civil Procedure 9(b)

, and had failed to state any claim under Federal Rule of Civil Procedure 12(b)(6). The district court granted the defendants' motion on July 15, 2014. The court noted that Ms. Presser had “fail[ed] to identify with specificity to whom bills for Acacia's services were allegedly presented.”¹⁸ The court also held that, at most, the complaint discussed how Acacia submitted bills to patients, insurers, and Medicaid programs “subject to their individual circumstances.”¹⁹ In the view of the court, Ms. “Presser does not even definitively allege that at least one patient's bill was submitted to the United States or the State of Wisconsin.”²⁰ The district court concluded that none of Ms. Presser's claims could survive a motion to dismiss.

The court also declined to grant Ms. Presser leave to amend her complaint. It noted that Ms. Presser already had been given the opportunity to file an amended complaint and concluded that the defendants would be prejudiced by the unresolved allegations of fraud. Ms. Presser now timely appeals.

II DISCUSSION

“The FCA is an anti-fraud statute and claims under it are subject to the heightened pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure

.” United States ex rel. Gross v. AIDS Research All.–Chi. , 415 F.3d 601, 604 (7th Cir. 2005). We review de novo a district court's decision to dismiss a complaint for failing to satisfy the requirements of Rule 9(b). AnchorBank, FSB v. Hofer , 649 F.3d 610, 614 (7th Cir. 2011).²¹

Drawing on the Supreme Court's holdings in Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d...