United States ex rel. Cieszyski v. Lifewatch Servs., Inc.

• Decision Date: 19 October 2015
• Docket Number: Case No. 13 CV 4052
• Parties: UNITED STATES ex rel. Cieszyski et al., Plaintiffs, v. LIFEWATCH SERVICES, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

UNITED STATES ex rel. Cieszyski et al., Plaintiffs,
v.
LIFEWATCH SERVICES, INC., Defendant.

Case No. 13 CV 4052

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

October 19, 2015

Magistrate Judge Sidney I. Schenkier

MEMORANDUM OPINION AND ORDER

Plaintiff-relator Matthew Cieszynski ("Relator" or "Plaintiff") is a certified technician for defendant LifeWatch Services, Inc. ("LifeWatch"). He brought suit against LifeWatch under the qui tam provisions of the False Claims Act ("FCA"), 31 U.S.C. § 3729, et. seq., and the related false claims statutes of the states of Georgia, Indiana, Iowa, Minnesota, Oklahoma, and Texas, alleging that LifeWatch collected reimbursements for medical services that were performed by non-U.S.-based technicians and/or non-certified technicians, in violation of Medicare and other federal and state insurance laws and regulations. After the United States declined to intervene in the matter, the complaint was unsealed on December 18, 2014 (doc. # 1). LifeWatch moved to dismiss the complaint for failure to state a claim pursuant to Fed. R. Civ. P. 12(b)(6) and failure to plead fraud with particularity pursuant to Fed. R. Civ. P. 9(b) (doc. # 23). Relator voluntarily amended his complaint (doc. # 37) and now LifeWatch again moves to dismiss (doc. # 41). For the reasons stated, we deny the motion, subject to one exception explained below.

I.

A motion to dismiss pursuant to Rule 12(b)(6) challenges the sufficiency of the complaint. Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th

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Cir. 2009). A complaint must contain enough information, in the form of "a short and plain statement of the claim," to show that the pleader is entitled to relief, and must give the defendant "fair notice" of the claim and its basis. Fed. R. Civ. P. 8(a)(2), Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In deciding a motion to dismiss under this standard, a court must determine whether the complaint includes "enough facts to state a claim to relief that is plausible on its face." Bible v. United Student Aid Funds, Inc., 799 F.3d. 633, 639 (7th Cir. 2015), quoting Twombly, 550 U.S. at 557. This "standard demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Rather, "[a] claim has facial plausibility 'when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Mann v. Vogel, 707 F.3d 872, 877 (7th Cir.2013) (quoting Iqbal, 556 U.S. at 678).

That said, even after the announcement of Twombly's "plausibility" standard, the Seventh Circuit has made clear that a court faced with a motion to dismiss pursuant to Rule 12(b)(6) must still accept as true all well-pleaded facts in the complaint and must construe the complaint in the light most favorable to the non-moving party, drawing all possible inferences in the non-moving party's favor. Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir. 2009), cert. denied, 558 U.S. 1148 (2010). A court may consider documents attached to the complaint without converting the motion into one for summary judgment. Bible, 799 F.3d at 640. In this case, Plaintiff attached a copy of Centers for Medicare and Medicaid Services ("CMS") Form 1500 to his amended complaint (Amended Complt., Ex. 1), and therefore, we may consider it when deciding the motion to dismiss.

When a complaint alleges fraud, the federal rules add an elevated pleading standard, which requires that "a party must state with particularity the circumstances constituting the fraud

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or mistake." Fed. R. Civ. P. 9(b), see also Tricontinental Industries, Ltd v. Pricewaterhouse Coopers, LLP, 475 F.3d 824, 833 (7th Cir. 2007). The Seventh Circuit has described this requirement as requiring a complaint to plead the "who, what, when, where, and how" of the fraud. Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 569 (7th Cir. 2012). Claims brought pursuant to the False Claims Act unquestionably are subject to the Rule 9 standard. Thulin v. Shopko Stores Operating Co., LLC, 771 F.3d 994, 998 (7th Cir. 2014). Even with the elevated pleading standard, however, Rule 9 does not require a relator to plead evidence; the Fed. R. Civ. P. 8 requirement that the complaint contain a "short and plain statement of the claim" still applies. United States ex. rel. Garbe v. Kmart Corporation, 968 F.Supp.2d 978 (S.D.Ill. 2013), citing Tomera v. Galt, 511 F.2d 504, 508 (7th Cir. 1975).

II.

We accept as true the following facts in the Amended Complaint. Defendant LifeWatch is a certified Independent Diagnostic Testing Facility ("IDTF"), which provides a number of remote heart-monitoring services for patients covered by government insurance programs Medicare, 42 U.S.C. §§ 1395 et. seq., Medicaid, 42 U.S.C. §§ 1396 et. seq., TRICARE (for active and retired members of the armed services and their families), and the Veterans Administration Health Care ("VA"), (collectively, the "Government Insurers") (Am. Complt. ¶¶ 2, 10, 12, 13, 15, 48). LifeWatch provides four main services to patients: Ambulatory Cardiac Telmetry ("ACT"), Holter Monitoring ("Holter"), ACT EX, and Event Monitoring services. Each of these services involves a patient wearing an external, non-invasive heart monitor for up to one month to capture and record cardiac activity (Am. Complt. ¶¶ 16, 18, 20, 22).¹ A

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LifeWatch technician remotely monitors the test to detect arrhythmias or other heart activity and then analyzes and/or summarizes the test results and provides them to the patient's doctor in a report (Am. Complt. ¶¶ 19, 21).

After a patient completes a heart monitoring test, LifeWatch or the referring physician submits a claim for reimbursement to the applicable Government Insurer (Am. Complt. ¶¶ 23, 24).² To claim reimbursement, providers submit CMS Form 1500 to the government (Am. Complt. ¶¶ 23, 29). Submission of CMS Form 1500 is required in order to obtain payment for claims submitted to the Government Insurers (Am. Complt. ¶ 29).³ One section of Form 1500 requires the insertion of a "Current Procedural Terminology" ("CPT") code to identify the specific services and procedures for which reimbursement is being claimed (Am. Complt. ¶¶ 24, 25, 30).

As a condition of receiving payment and/or reimbursement from the Government Insurers for the claims submitted, providers - including LifeWatch - are required to certify on Form 1500 that, among other things, the CPT code used for reimbursement is justified by the services rendered in accordance with CPT guidelines and Medicare and Medicaid reimbursement rules (Am. Complt. ¶30).⁴ Form 1500 also requires that the provider make other certifications,

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including: (1) that it has "provided or will provide sufficient information required to allow the government to make an informed eligibility and payment decision;" and (2) that the claim "complies with all applicable Medicare and/or Medicaid laws, regulations, and program instructions for payment, including but not limited to the Federal anti-kickback statutes and Physician Self-Referral law ("Stark Law")" (Am. Complt. ¶ 31).

As codified in 42 U.S.C. §1395y(a)(4) and 42 C.F.R. 411.9(a), Medicare prohibits reimbursement for services "which are not provided within the United States," including situations in which the patient is located in the United States but the actual service (such as analysis of radiology imagery) is performed outside the United States. (Am. Complt. ¶¶ 37, 38, 38). The CMS Medicare Benefit Policy Manual reiterates the prohibition against paying for services performed outside the United States for a patient inside the United States (Am. Complt. ¶¶ 38, 39). Plaintiff alleges that in such a scenario, neither the radiologist nor the facility in the United States that performed the imaging test would receive reimbursement from Medicare for services provided outside the United States (Id.). Plaintiff also alleges that the VA program has this same limitation on reimbursement (Am. Complt. ¶ 40), as do the Medicaid statutes for Georgia, Indiana, Iowa, Minnesota, Oklahoma, and Texas (Am. Complt. ¶ 42).

According to Plaintiff, LifeWatch uses technicians in India to perform a substantial number of remote cardiac monitoring tests, including some for patients covered by the Government Insurers (Am. Complt. ¶ 43). As examples, the Amended Complaint outlines 12 occasions in 2012 and 2013 when LifeWatch used technicians located in India to perform remote

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monitoring for patients undergoing ACT and Holter tests (Am. Complt. ¶ 44).⁵ Plaintiff alleges that LifeWatch uses technicians located in India for work covered by all four of the Government Insurance programs (Am. Complt. ¶ 45). Plaintiff also alleges that LifeWatch was aware that its billing practices were fraudulent, and that it has collected substantial sums from the Government Insurers based on its billing for services that were not eligible for reimbursement because they were performed by technicians in India (Am. Complt. ¶ 47).

As part of its certification to become an IDTF, LifeWatch must meet certain standards, including that all non-physician personnel used to perform tests (such as monitoring technicians) must be certified by a state or national...