United States v. Health Mgmt. Assocs., Inc.
| Decision Date | 30 October 2014 |
| Docket Number | No. 13-11859,13-11859 |
| Parties | UNITED STATES OF AMERICA, Plaintiff, J. MICHAEL MASTEJ, ex. rel., Plaintiff-Appellant, v. HEALTH MANAGEMENT ASSOCIATES, INC., NAPLES HMA, LLC, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
[DO NOT PUBLISH]
D.C. Docket No. 2:11-cv-00089-JES-DNF
Appeal from the United States District Court for the Middle District of FloridaBefore HULL, COX and FARRIS,* Circuit Judges.
Plaintiff-relator Michael Mastej brought a qui tam action against two Defendants, Health Management Associates, Inc. and Naples HMA, LLC, alleging violations of the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq. The district court dismissed Mastej's complaint for failure to satisfy the heightened pleading requirements in Rule 9(b) of the Federal Rules of Civil Procedure, which require a plaintiff to state with particularity the circumstances constituting fraud. See Fed. R. Civ. P. 9(b).
Plaintiff Mastej appeals. After review of the record and the parties' briefs, and having the benefit of oral argument, we affirm in part and reverse in part.
Defendant Health Management Associates, Inc. ("HMA") is a business organization operating approximately 56 hospitals in 15 states. Defendant Naples HMA, LLC ("Naples HMA") is a subsidiary of HMA. Defendant Naples HMAdoes business under the name Physicians Regional Medical Center ("the Medical Center").
The Medical Center has two hospital campuses: the Collier Boulevard facility and the Pine Ridge facility. The Medical Center employs separate Chief Executive Officers ("CEOs") at each campus. Although the Medical Center has two campuses, it is a single hospital that collectively operates under one hospital license and provider number.
Mastej has over 30 years of experience in the health care industry. Before he began working for Defendant HMA in 2001, Mastej held many positions in the health care industry. He worked as a Medicare/Medicaid auditor for Michigan Blue Cross, a reimbursement specialist with Humana, and as the CEO of several hospitals and medical centers.
From 2001 to February 2007, he was Defendant HMA's Vice President of Acquisitions and Development. In this role, Mastej attended monthly operations meetings with Defendant HMA's CEO, Chief Operating Officer ("COO"), regional senior vice presidents, divisional vice presidents, and corporate department heads. While Vice President at HMA, Mastej "often attended weekly case management meetings in which Medicare and Medicaid patients and billing were discussed."Mastej alleges that in these HMA weekly case management meetings, "every patient was reviewed, including how the services were being billed to each patient," and as a result Mastej was "intimately familiar with the payor mix at the hospitals."1 As HMA's Vice President, Mastej was "specifically aware that the doctors and medical groups at issue in this case referred Medicare and Medicaid patients for service at Collier Boulevard and Pine Ridge" and "treated Medicare and Medicaid patients at those hospitals." Additionally, Mastej flew on HMA's corporate jets, making him familiar with the procedures for HMA's use of its corporate jets.
In February 2007, however, Mastej left Defendant HMA to work for its subsidiary, Defendant Naples HMA. From February 5, 2007 to October 2007, Mastej was the CEO of the Medical Center's Collier Boulevard facility. Mastej's responsibilities as Collier Boulevard's CEO included "speaking to Defendants' upper management on all aspects of management of Collier Boulevard."Additionally, Mastej negotiated many physician contracts for "on-call" coverage at Collier Boulevard.
Through these two positions, Mastej "was familiar with the operational aspects pertinent to the fraudulent schemes in question." And through these positions, "Mastej was familiar with the services offered by Collier Boulevard and Pine Ridge, the patient demand for [those] services, the staffing necessary to meet patient demand for [those] services, the revenues generated by [those] services, and the costs of providing [those] services."
On January 11, 2010, Mastej, as a relator, filed his initial qui tam complaint alleging that the Defendants violated the False Claims Act ("FCA").2 For the purposes of this appeal, the operative complaint is Mastej's third amended complaint (the "complaint"), filed on March 8, 2012.
The FCA imposes liability for any person who, inter alia: (1) knowingly presents false claims to the government (the "presentment" provision); (2) knowingly makes or uses a false statement "to get" the government to pay a claim (the "make-or-use" provision); or (3) knowingly makes a false record or statementto decrease an obligation to pay the government (the "reverse-false-claim" provision). See 31 U.S.C. § 3729(a)(1), (2), (7) (1994).3 The FCA permits a private individual, known as a relator, to bring a qui tam action on the relator's behalf and the government's behalf for any FCA violation. See 31 U.S.C. § 3730(b).4
The underlying bases for Mastej's FCA claims are his allegations that:
(1) the Defendants made payments to six neurosurgeons and provided a golf-trip benefit to four other doctors to induce them to refer, or to reward them for referring, Medicare patients to the Defendants' Medical Center in Naples, Florida; (2) those ten physicians referred Medicare5 patients to the Medical Center formedical services, which were provided; (3) the Defendants' Medical Center submitted "interim claim forms" and annual "hospital cost reports" requesting payment for the referred patients' medical treatment, which Medicare paid; (4) the Defendants violated the Stark and Anti-kickback statutes by seeking any Medicare reimbursement at all for the treatment of patients referred by doctors to whom the Defendants had given benefits; and (5) the Defendants then falsely certified to the government in the hospital cost reports that the services were provided in compliance with applicable laws, including the Stark and Anti-kickback statutes.6
Importantly, Mastej does not assert that the Defendants provided the referred patients with medical services that were not needed, not rendered, of inferior quality, or overpriced. Rather, even though the medical services were needed, provided, and properly priced, Mastej contends that the Defendants made false claims or false statements within the meaning of the FCA (1) by seeking any Medicare reimbursement whatsoever for patients referred by the ten named doctors due to the Defendants' pay-for-referral scheme and (2) by then certifying to thegovernment that they provided these medical services in compliance with applicable laws, such as the Stark and Anti-kickback statutes.
With this overview of Mastej's FCA claims, we review: (1) the parts of the Stark and Anti-kickback statutes relevant to this case; (2) the complaint's allegations about the "on-call" payments to six neurosurgeons and the golf-trip benefit for four other doctors, both of which allegedly constituted "financial relationships" within the meaning of the Stark statute and "remuneration" within the meaning of the Anti-kickback statute; and (3) the Defendants' interim claim forms and annual hospital cost reports.
In its most general terms, the Stark statute prohibits doctors from referring Medicare patients to a hospital if those doctors have certain specified types of "financial relationships" with that hospital. See 42 U.S.C. § 1395nn(a)(1)(A). And, in turn, the Stark statute prohibits that same hospital from presenting claims for payment to Medicare for any medical services it rendered to such referred patients. See id. § 1395nn(a)(1)(B).
Although the Stark statute broadly defines "financial relationships," the statute contains numerous exceptions to that definition. See id. § 1395nn(a)(2); id.§ 1395nn(b)-(e) ().
For the limited purposes of their motion to dismiss, the Defendants do not argue that an exception to the Stark statute's broad definition of "financial relationship" applies to the financial-referral incentives alleged in Mastej's complaint. Rather, the Defendants concede that the complaint's factual allegations about the neurosurgeon payments and golf benefit—taken as true at this motion-to-dismiss stage—satisfy the Stark statute's definition of "financial relationship" between a doctor and a hospital.
Where such a Stark-defined "financial relationship" exists—as the Defendants concede for the purposes of their motion to dismiss—a doctor "may not make a referral to the [hospital]," and the hospital "may not present or cause to be present[ed] a [Medicare] claim." See id. § 1395nn(a)(1). For purposes of this motion, the Defendants also do not contest that they could not seek Medicare reimbursement for medical services (even though actually rendered to patients) if those patients were referred by doctors in exchange for the particular financial incentives alleged in the complaint.
Generally speaking, the Anti-kickback statute prohibits a hospital from financially inducing a person to refer a Medicare patient. See 42 U.S.C. § 1320a-7b(b). Relevant to this case, the Anti-kickback statute forbids knowingly "offer[ing] or pay[ing] any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person . . . to refer an individual [for medical services] for which payment may be made in whole or in part under a Federal health care program" such as Medicare. Id. § 1320a-7b(b)(2)(A) (emphasis added); see also id. § 1320a-7b(b)(3) ().
A violation of the Anti-kickback statute occurs when the defendant (1) knowingly and...
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