United States ex rel. Hobbs v. Medquest Assocs. Inc.
| Decision Date | 21 October 2011 |
| Docket Number | 3:06-01169 |
| Parties | UNITED STATES OF AMERICA and the STATE OF TENNESSEE ex rel, KAREN J. HOBBS, Plaintiffs, v. MEDQUEST ASSOCIATES, INC., BIOIMAGING AT CHARLOTTE, INC., BIOIMAGING OF COOLSPRINGS, INC., and BIOIMAGING AT HARDING, INC., now known as BIOIMAGING AT EDMONDSON, Defendants. |
| Court | U.S. District Court — Middle District of Tennessee |
MEMORANDUM
Before the Court is the Defendants' motion to reconsider under Rule 60(b) (Docket Entry No. 227). The Defendants' motion challenges the Court's earlier finding that civil penalties of five thousand five hundred dollars ($5,500) and eleven thousand dollars ($11,000) were appropriate for each Medicare billing included in the Defendants' two distinct violations of the False Claim Act, ("FCA"), 31 U.S.C.§ 3729 et seq. The Defendants assert that such an award is ten times the Government's actual damages and results in an excessive fine prohibited by the Excessive Fines Clause of the Eighth Amendment, as supported by the United States Supreme Court and Sixth Circuit precedents.
In its response, the United States contends, in essence: (1) that the award of treble damages and civil penalties is mandatory under the FCA; (2) that the civil penalties under the FCA serve a distinct governmental interest of deterrence aside from repayment of monies; (3) that the Defendants' persistent and widespread submissions of false Medicare claims were knowingly committed; (4) that the Defendants' violations were not technical reporting violations; (5) that under judicial precedents, the ratio of the Court's award of civil penalties to damages is well within the range of reasonableness for FCA awards; and (6) that the Court's award of less than the maximum penalties precludes an excessive fine challenge under the Eighth Amendment. (Docket Entry No. 229).
Plaintiff, Karen Hobbs, a former employee of MedQuest Associates, Inc. filed this action as Relator on behalf of the United States, under the False Claims Act, ("FCA"), 31 U.S.C. §§ 3729 through 3733 against the Defendants: MedQuest Associates, Inc., ("MedQuest"), Biolmaging at Charlotte, Inc., ("Charlotte Center"), Biolmaging of CoolSprings, Inc. ("CoolSprings Center") and Biolmaging at Harding, Inc. ("Harding Center"). The Defendants operate Independent Diagnostic Testing Facilities ("IDTFs") and participate in the Medicare program. On March 31, 2009, the Government notified the Court of its decision to intervene and filed its intervening complaint on May 22, 2009. (Docket Entry No. 49).
In earlier proceedings, the Court denied the Defendants' motion to dismiss (Docket Entry No. 95) concluding that Medicare regulations on physician supervision of diagnostic tests are conditions of payment and that under the factual allegations and relevant Medicare regulations, the United States and the Relator stated claims for violations of the FCA. (Docket Entry No. 94, Memorandum at 15 -19).
Later, the parties filed motions for summary judgment on the FCA claims. In sum, the United States's FCA theory and proof were two-fold: (1) that Medicare regulations and Medicare's designated carrier, CIGNA, require a supervising physician for contrast testing at an IDTF to be a board certified radiologist or a physician with appropriate training and approved by CIGNA, but MedQuest submitted claims to Medicare for contrast testing at its Nashville area IDTFs by physicians who were neither radiologists nor physicians approved by Medicare in violation of these Medicare's regulations and policies; and (2) that MedQuest knowingly delayed notice of the change of ownership of its Charlotte Center to an "IDTF" from a "physician's office" and intentionally used its predecessor's Medicare provider number for Medicare payments for diagnostic tests of Medicare beneficiaries at MedQuest's Charlotte facility.
In sum, the Defendants' proof and argument were that neither Medicare regulations nor sound medical practice require a radiologist as a supervising physician because the only medical problem would be a patient's adverse reaction to a contrast injection for which any physician is qualified to address. Absent a controlling statute or regulation, the Defendants contended that any failure to satisfy a requirement of CMS and/or CIGNA, its Medicare carrier, cannot establish a FCA violation. Moreover, Defendants cited a conflict among Medicare carriers on the requirement of a radiologist for direct supervision of an IDTF's testing that also precludes any FCA liability. Defendants also assert that Medicare's backbilling policy would pay for any billing, prior to Medicare's approval of MedQuest's acquisition of the Charlotte facility as an IDTF. Defendants note that CIGNA did not take any action after notice of MedQuest's Charlotte Center's billings with Dr. Witt's Medicare billing number.
As set forth in its 77 page Memorandum (Docket Entry No. 218), the Court awarded summary judgment to the United States and found, in summary that:
Here, at MedQuest's Nashville area IDTFs, Defendants have a documented and undisputed history of extensive use of physicians who lacked Medicare approval to provide any supervision at an IDTF. These physicians are not shown to possess the certification or specialized training required by CIGNA. Moreover, MedQuest's Nashville area IDTF technical staff had constant difficulties with securing any physicians for coverage of contrast testing that requires direct physician supervision. As a result, the proof establishes that MedQuest's technical non-physician staff members actually injected contrast and conducted contrast studies of Medicare beneficiaries without any physician supervision that Section 410.33 does not authorize. MedQuest submitted Medicare claims for payment for all of those testings and by doing so, MedQuest violated its first express certification that the physicians listed in its application would supervise such testing and later, in submitting billings implicitly certified that those tests were provided in accordance with applicable Medicare regulations and by physicians approved by Medicare.
As to the knowingly or reckless disregard element, MedQuest is an experienced IDTF provider that operates in thirteen states. MedQuest has been in this market since 1998 and is now the leading IDTF firm in this market. MedQuest has a trained staff on CMS 855 form and related instructions. This supervising physician coverage for the diagnostic tests with contrast was well known to MedQuest upper management and managers of its Nashville area IDTFs. Yet, the Defendants instructed their staffs to select any doctor without regard to that doctor's "proficiency in the performance and interpretation of each type of diagnostic procedure" at the Defendants' facilities. MedQuest had a clear alternative to submit physicians who were not radiologists to be supervising physicians, but who had appropriate training as with Dr. Tan, an internist. The Court concludes that the proof establishes that MedQuest's failure to provide adequate supervising physician coverage for the diagnostic tests with contrast was so significant that MedQuest's technical staff at its Nashville area IDTFs actually conducted the diagnostic testing without any physician supervision.
For these reasons, the Court concludes that MedQuest's use of non-Medicare approved physicians for contrast studies represents a reckless disregard of Medicare's program integrity statute, Medicare regulations and CIGNA's requirements ( authorized by the Secretary's regulation) for physicians with the demonstrated capability to provide direct coverage of these tests and approved by Medicare. Defendants' extensive use for contrast studies of physicians who were neither trained nor approved by their Medicare carrier is also evidence of Defendants' reckless conduct establishing violations of the FCA. Thus, the Court concludes that the United States's proof establishes Defendants' liability under FCA precedents.
To continue reading
Request your trial