United States ex rel. Eastlick v. Odom

Decision Date28 October 2021
Docket NumberC/A No. 3:20-cv-00803-CMC
Citation569 F.Supp.3d 291
Parties UNITED STATES of America EX REL. Dr. Lewis EASTLICK, Plaintiff-Relator v. William Thomas ODOM, II, M.D., Defendant.
CourtU.S. District Court — District of South Carolina

Johanna Valenzuela, US Attorneys Office, Columbia, SC, for Plaintiff-Relator United States of America.

James Hunter May, US Attorneys Office, John C. Moylan, III, Mary Lucille Dinkins, Wyche PA, Columbia, SC, Jonathan Evan Kroner, Pro Hac Vice, Jonathan Kroner Law Office, Miami, FL, for Plaintiff-Relator Dr. Lewis Eastlick.

Karl Huggins Smith, Smith Watts and Associates, Hartsville, SC, George Kellen Brew, Pro Hac Vice, George Brew Law Office, Jacksonville, FL, for Defendant.

Opinion and Order


This qui tam action under the False Claims Act ("FCA"), 31 U.S.C. § 3729 (a)(1)(A)(B), involves allegations a physician filed thousands of false and/or fraudulent claims for reimbursement of medical services under the Medicare Part B program. The action is currently before the court on cross motions for summary judgment, and the court has carefully reviewed the voluminous filings in this regard.

I. Relevant Background

In 1965, Congress established the Medicare program as Title XVIII of the Social Security Act, commonly known as the Medicare Act, to address the serious need for health insurance coverage for the aged and disabled. 42 U.S.C. §§ 1395 – 1395lll. The Medicare program is divided into four parts denoted by the letters A through D. 42 C.F.R. § 400.202. Medicare Part B is the only part at issue in the instant case. 42 U.S.C. §§ 1395j – 1395w-6. Generally speaking, Medicare Part B covers out-patient medical care such as physician services, the provision of medical supplies, diagnostic services, and laboratory and x-ray tests.1 Id. §§ 1395k, 1395w-4, 1395x(s)(1); 42 C.F.R. §§ 407.2 ; 410.10(a), (d)(e), (g); 410.20(a).

To fully apprehend the factual and legal issues at hand, a journey into the dense forest of statutes and regulations forming some of the operational intricacies of Medicare Part B is necessary. In general, Medicare Part B covers only "reasonable and necessary" out-patient medical care "for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." 42 U.S.C. § 1395y(a)(1)(A). Under the Medicare Act, a physician who furnishes medical services under Medicare is a "supplier," id. § 1395x(d), and, with exceptions not relevant here, "[t]he term ‘physician services’ means professional services performed by physicians, including surgery, consultation, and home, office, and institutional calls," id. 1395x(q). See also 42 C.F.R. § 400.202 (defining "Supplier," for purposes of Medicare, as "a physician or other practitioner, or an entity other than a provider, that furnishes health care services under Medicare"); (defining "Provider," for purposes of Medicare, as, inter alia , a hospital, a skilled nursing facility, a comprehensive outpatient rehabilitation facility, or a home health agency).

Congress entrusted the Secretary of the United States Department of Health and Human Services ("the Secretary") to administer Medicare Part B. Id. §§ 1395ff(a)(1), 1395hh(a)(1). The Secretary in turn delegated much of this responsibility to its own internal agency known as the Centers for Medicare and Medicaid Services ("CMS"). See Centers for Medicare & Medicaid Services; Statement of Organization, Functions and Delegations of Authority; Reorganization Order, 66 Fed. Reg. 35,437 -03 (July 5, 2001). CMS, in turn, contracts with private third-parties known as Medicare Administrative Contractors ("MACs") to process claims under Medicare Part B. 42 U.S.C. §§ 1395u(a), 1395kk-1. MACs are authorized to process and pay Medicare Part B claims within a specified geographic jurisdiction. 42 C.F.R. §§ 421.400, 401, 404. At all relevant times during the instant case, the MAC authorized to process claims by Medicare Part B providers and suppliers in South Carolina was Palmetto GBA. ECF No. 52-3 at 2.

MACs "typically authorize payment of claims immediately upon receipt of the claims, so long as the claims do not contain glaring irregularities." Gulfcoast Med. Supply v. Sec'y, Dep't of Health & Human Servs. , 468 F.3d 1347, 1349 (11th Cir. 2006). Post-payment audits conducted by recovery audit contractors ("RACs") under the Medicare Integrity Program are intended to catch any improper payments or overpayments. 42 U.S.C. § 1395ddd(a), (f)(7), (h) ; 42 C.F.R. § 421.304. In the case of an observed abnormal billing pattern, RACs are authorized to use probe sampling in conducting the audit. 42 U.S.C. § 1395ddd(f)(8). Additionally, in the case of sustained or a high level of payment error, extrapolation is permissible "to determine overpayment amounts to be recovered by recoupment, offset, or otherwise ...." Id. § 1395ddd(f)(3). Notably, MACs can also perform the same functions as RACs, so long as they do not duplicate those functions. Id. 1395kk-1(a)(4)(H), (a)(5). The upshot is a MAC can conduct a post-payment audit of claims so long as a RAC is not already doing so.

With the aim of consistency in coverage determinations, Medicare's national payment policies for covered items or services are set forth in national coverage determinations ("NCDs"), which are formal decisions by the Secretary regarding whether and under what circumstances Medicare will cover a particular item or service. 42 U.S.C. § 1395ff(a)(1), (f)(1)(B) ; 42 C.F.R. § 405.1060(a)(1). National coverage determinations "do[ ] not include a determination of what code, if any, is assigned to a particular item or service covered ... or a determination with respect to the amount of payment made for a particular item or service so covered." 42 U.S.C. § 1395ff(f)(1)(B). National coverage determinations are binding on both MACs and administrative law judges ("ALJs") who preside over Medicare coverage appeals. 42 U.S.C. § 1395ff(f)(1)(A)(i) ; 42 C.F.R § 405.1060(a)(4).

In contrast, local coverage determinations ("LCDs") are decisions by a particular MAC and govern Medicare coverage for a particular item or service within the MAC's geographic jurisdiction. 42 U.S.C. § 1395ff(f)(2)(B). Absent a governing LCD, a MAC reviewing a claim for Medicare reimbursement applies the "not reasonable and necessary" coverage exclusion and other coverage criteria to the factual circumstances at hand.

Medicare Program: Review of National Coverage Determinations and Local Coverage Determinations, 68 Fed. Reg. 63692-1, 63693 (Nov. 7, 2003) (final rule). ALJs are not bound by LCDs but must afford an LCD substantial deference if it applies to a particular claim. 42 C.F.R. § 405.1062(a).

A physician who wants to bill Medicare for treating a patient covered by Medicare Part B must enroll in Medicare as a supplier and receive a Medicare National Provider Identifier ("Medicare NPI"). Become A Medicare Provider or Supplier , https://www-cms-gov.ezproxy.lib.ntust.edu.tw/Medicare/Provider-Enrollment-and-Certification/Become-a-Medicare-Provider-or-Supplier (last visited October 28, 2021). The enrolled physician then files a claim for reimbursement of his or her services covered by Medicare Part B by submitting, in most cases, an electronic version of the CMS-1500 claim form. 42 C.F.R. § 424.32(a)(1), (b) ; Medicare Claims Processing Manual Chapter 26 - Completing and Processing Form CMS-1500 Data Set , https://www-cms-gov.ezproxy.lib.ntust.edu.tw/regulations-and-guidance/guidance/manuals/downloads/clm104c26pdf.pdf (last visited October 28, 2021). The CMS-1500 claim form requires the claimant to include his Medicare NPI, the appropriate diagnostic code, and the appropriate billing code for the services provided. 42 C.F.R. § 424.32(a)(2) ; 45 C.F.R. §§ 160.103 ; 162.1002(a)(5), (c). As participants in the Medicare program, Medicare suppliers have a duty to familiarize themselves "with the legal requirements for cost reimbursement." See Heckler v. Cmty. Health Servs. , 467 U.S. 51, 64, 104 S.Ct. 2218, 81 L.Ed.2d 42 (1984).

In 2002, billing codes developed by the American Medical Association known as Current Procedural Terminology Codes ("CPT Codes") became a valid billing code-set by which healthcare providers may bill the federal government for reimbursement under Medicare. See 45 C.F.R. § 162.1002(a)(5), (c) (providing CPT Codes developed and maintained by the American Medical Association are a valid code-set by which healthcare providers may bill for reimbursement under Medicare); see also Hooper v. UnitedHealthcare Ins. Co. , 694 F. App'x 902, 908–09 (4th Cir. 2017) (describing history of the CPT codebook developed by the American Medical Association); The American Medical Association, CPT Overview and Code Approval , https://www-ama-assn-org.ezproxy.lib.ntust.edu.tw/practice-management/cpt/cpt-overview-and-code-approval (last visited October 28, 2021). As will be detailed shortly, two different CPT Codes are at issue in the pending cross motions for summary judgment.

As the claims process goes, a MAC makes an initial determination as to whether an item or service qualifies for reimbursement within its jurisdictional geographic region. 42 C.F.R. § 405.920. Any claimant dissatisfied with the initial determination may file an administrative appeal. Id. § 405.904. The administrative appeal process consists of up to four steps: (1) a redetermination by the MAC which originally denied the claim; (2) review by a different contractor known as a "qualified independent contractor" or "QIC"; (3) a hearing before an ALJ; and (4) review by the Medicare Appeals Council ("the Council"), an adjudicatory body within the United States Department of Health and Human Services. Id. § 405.904(a)(2), (b). See also Agendia, Inc. v. Becerra , 4 F.4th 896, 897 (9th Cir. 2021) (listing the four steps of administrative appeal process for claims under Medicare Parts A and B). Once a claimant has...

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