United States ex rel. Integra Med Analytics, LLC v. Creative Sols. in Healthcare, Inc.
| Decision Date | 13 November 2019 |
| Docket Number | Civil Action No. SA-17-CV-1249-XR |
| Parties | UNITED STATES OF AMERICA, ex rel. INTEGRA MED ANALYTICS, LLC, Plaintiff, v. CREATIVE SOLUTIONS IN HEALTHCARE, INC., Defendant. |
| Court | U.S. District Court — Western District of Texas |
On this date, the Court considered Defendant's Motion to Dismiss Relator's First Amended Complaint (docket no. 35), Relator's Opposition (docket no. 42), Defendant's Reply (docket no. 47), both parties' oral arguments on August 22, 2019 (docket no. 52), and both parties' supplemental briefings in further support and opposition (docket nos. 53 and 54). After careful consideration, Defendant's Motion is DENIED IN PART and GRANTED IN PART.
Integra Med Analytics, LLC ("Relator") brings this qui tam action against Creative Solutions in Healthcare, Inc. ("Defendant"), alleging violations under the False Claims Act ("FCA"). Specifically, Relator asserts violations of 31 U.S.C. § 3729(a)(1)(A)-(C) and (G). Defendant owns1 and operates a network of skilled nursing facilities ("SNFs") throughout Texas.Docket no. 17 at 4. Relator, through both quantitative and qualitative analysis, alleges that Defendant and its rehab contractors, Century Rehab ("Century") and Reliant Rehabilitation ("Reliant")2, engaged in various practices resulting in the submission of over $94 million in false claims to Medicare, as well as approximately $2.01 million in false claims to Medicaid from coinsurance for Medicare patients dual enrolled in Medicaid.
Medicare covers post-hospitalization services provided in SNFs for up to 100 days per year, reimbursing SNFs at a per-diem rate based on one of sixty-six resource utilization groups ("RUGs") that are determined by the amount of therapy and other services provided to patients. Docket no. 17 at 9. The highest category, Ultra High Rehab, is for patients receiving more than 720 minutes of rehab in a week. Docket no. 17 at 9.
Relator contends that Defendant engaged in a scheme to manipulate Medicare reimbursement through a variety of measures, three of which Relator alleges at detail. First, Relator alleges leadership pressured therapists to use Ultra High Rehab regardless of need. Docket no. 17 at 11-16. Relator argues this manifested in multiple ways, including prescribing therapy based on patient insurance rather than need and the provision of therapy to patients without the mental or physical capacity to tolerate it. Id. As an example, one former Director of Rehab at a Creative facility alleges he was ex ante dictated therapy to assign and told afterwards to create a justification for the provision of Ultra High Rehab. Id. at 15. In fact, Relator alleges, Defendant required justification for patients who did not receive Ultra High Rehab. Id.
Second, Relator alleges that management trained therapists at Creative-managed facilities to fraudulently bill to meet the minimum threshold for Ultra High Rehab. Id. at 16-18. Relator claims this manifested in many ways, including: billing Ultra High Rehab for patients who were unconscious or otherwise unable to participate in therapy; falsifying therapy evaluations, including back-dating evaluations to allow for more possible billing time (and when the therapist refused to do so, bringing in another who would); billing group therapy as the more expensive individual therapy; encouraging therapists to bill for otherwise non-reimbursable non-skilled services3; billing for more therapy than was actually provided; and billing for therapy minutes during an evaluation session.4 Id. at 16-18.
Relator's third set of allegations centers around Defendant's alleged policy of maximizing a patient's stay to the 100 days covered by Medicare Part A—even where not clinically warranted—to maximize reimbursement. Id. at 18-19. One therapist assistant alleges being ordered to provide therapy for the full 100 days even where not warranted and being asked "to be creative" to find ways to fill those 100 days, e.g. finding non-skilled, non-therapy tasks to fill the 100 days, despite Medicare regulations stating that such routine non-skilled services are not reimbursable. Id.
To support those three sets of allegations, Relator conducted various statistical and econometric analyses, focusing on identifying excessive amounts of Ultra High Rehab at Creative-owned facilities compared to other SNFs. Id. at 19-96. Relator created 589 groupings (or "bins") of similar principal diagnosis codes, using a fixed-effect linear regression model. Id. at 21-22.Relator alleges its statistics reveal excessive use of Ultra High Rehab across Creative facilities, rather than limited to a few outlier facilities. Id. at 30. In its analysis, Relator points to specific patients whose claims, Relator argues, show that Creative billed for medically unreasonable and unnecessary treatment. Id. at 32-39.
Relator made attempts to rule out alternative hypotheses for the excessive use of Ultra High Rehab. Id. at 45. Relator's fixed-effect linear regression model, it alleges, controls for possible explanations including variations in patient health, patient characteristics, and county demographics. Id. at 46-52. Relator used a Comparative Interrupted Time Series (CITS) model to analyze Creative's acquisition of new SNFs to determine whether there was an increase in the amount of Ultra High Rehab provided after Creative gained ownership and control, finding a "significant jump" in the amount of Ultra High Rehab for patients treated before and after Creative's acquisition of the SNF. Id. at 52-66. Relator also alleges its statistics reveal there is not something unique about the diagnoses of Creative patients that explains the excessive use of treatment, as the analysis compares the use of therapy within the same diagnostic codes. Id. at 66-67. For example, for patients diagnosed with hip fractures, Creative provides an average of 34.82 days of Ultra High Rehab while other facilities provide an average of 21.57 days. Id. at 66. Finally, Relator alleges its analysis rules out the argument that the statistical difference is caused by either the attending or referring physicians. Id. at 68-77.
Relator further alleges that its statistics reveal Creative's large proportion of patients receiving exactly 100 days of Ultra High Rehab demonstrates Creative's attempts to maximize Medicare reimbursements. Id. at 39. Specifically, Relator alleges that Creative has more than 7.8 times as many patients receiving exactly 100 days of Ultra High Rehab as compared to other SNF facilities and that the probability of this difference being due to random chance is less than 1 in100 million. Id. at 40. And Relator alleges that patients within principal diagnosis codes still receive a significantly higher average length of stay compared to other patients with the same diagnoses at other SNFs, ruling out the possibility that Creative simply has sicker patients. Id. at 78- 85. Relator also compared the average length of stay at Creative and non-Creative SNFs for the same doctor, finding the average length of stay longer for Creative patients, and thus—Relator argues—ruling out the possibility that Creative doctors' particular preferences caused the lengthier stays. Id. at 89-92.
Relator also alleges that Defendant conspired with Century, Reliant, and its facilities to defraud the federal government in violation of 31 U.S.C. § 3729(a)(1)(C)—by knowingly and systematically falsifying claims allowed or paid by the government. Id. at 97. Finally, Relator alleges that Defendant violated § 3729(a)(1)(G) by concealing Medicare overpayments. Id. at 96-97. Relator filed this action on December 11, 2017. Docket no. 1. On December 12, 2018, the United States indicated its decision not to intervene. Docket no. 11.
Defendant raises three primary arguments in support of its motion to dismiss. First, Defendant argues Relator's claims fail under Rules 12(b)(6) and 9(b). Second, Defendant argues the action is barred by the public disclosure bar. Finally, Defendant argues that Relator's conspiracy and "reverse FCA" claims fail as derivative of inadequate FCA allegations and because Relator does not allege the required specific intent necessary for conspiracy.
Defendant argues that Relator's First Amended Complaint fails under Rules 12(b)(6) and 9(b) in that it does not adequately plead that Defendant knowingly submitted false claims or adequately plead the "who, what, when, where, and how of the alleged fraud." Docket no. 54 at 3.Relator responds that it alleges sufficient details of the scheme "paired with reliable indicia" in the form of statistical analysis, such that the evidence leads to a strong inference that Defendant submitted false claims.
To survive a 12(b)(6) motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim for relief must contain: (1) "a short and plain statement of the grounds for the court's jurisdiction"; (2) "a short and plain statement of the claim showing that the pleader is entitled to the relief"; and (3) "a demand for the relief sought." FED. R. CIV. P. 8(a). In considering a motion to dismiss under Rule 12(b)(6), all factual allegations from the complaint should be taken as true, and the facts are to be construed favorably to the plaintiff. Fernandez-Montes v. Allied Pilots Assoc., 987 F.2d 278, 284 (5th Cir. 1993). To survive a 12(b)(6) motion, a complaint must contain "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555.
In addition, "a complaint filed under the False Claims Act must meet the heightened pleading standard of Rule 9(b)." United States ex rel...
To continue reading
Request your trial