Sixth and Tenth Circuits Rule that Medical Statements Are Capable of Falsehood Under the FCA

Sixth and Tenth Circuits Rule that Medical Statements Are Capable of Falsehood Under the FCA

October 10, 2018

Two recent False Claims Act (FCA) decisions – United States v. Paulus, 894 F.3d 267 (6th Cir. 2018) and United States ex rel. Polukoff v. St. Mark’s Hospital, 895 F.3d 730 (10th Cir. 2018) – establish that an FCA claim can be based on a false exercise of medical judgment. In other words, opinions, medical judgments, and conclusions can be false for the purposes of an FCA claim. These holdings suggest that medical practitioners cannot rely solely upon a defense of “medical opinion” as the opinion itself can subject the holder to FCA liability.

The Sixth Circuit’s Paulus Decision

In Paulus, a federal jury convicted physician Richard Paulus of committing healthcare fraud and making false statements on the theory that he exaggerated the extent of artery blockages so he could perform procedures and bill Medicare for them. Under Rule 29 of the Federal Rules of Criminal Procedure, Paulus moved for acquittal and the district court acquitted Paulus on all counts, concluding that the government could not prove that Paulus defrauded or made false statements to health care programs because a determination of stenosis in an artery is subject to medical opinion, incapable of confirmation.

On June 25, 2018, the Sixth Circuit reversed the district court’s entry of acquittal. In rejecting the district court’s conclusion, the Sixth Circuit observed that “scientific measurements may sometimes be imprecise,” but “it is up to the jury – not the court – to decide whether the government’s proof is worthy of belief.” The Sixth Circuit added that a “court may not enter a judgment of acquittal merely because it doubts the persuasiveness of the government’s expert testimony.” Therefore, the Sixth Circuit concluded that medical opinions can be proven fraudulent.

The Tenth Circuit’s Polukoff Decision

In Polukoff, whistleblower Dr. Gerald Polukoff, a physician who worked with Dr. Sherman Sorensen, alleged that Sorensen performed thousands of unnecessary heart surgeries and received reimbursement through the Medicare Act by fraudulently certifying that the surgeries were medically necessary. The district court dismissed Polukoff’s action on a motion to dismiss, reasoning that, absent a specific regulation addressing the necessity of the treatment, a physician’s medical judgment concerning the necessity of a treatment could not be “false or fraudulent” under the FCA.

On July 9, 2018, the Tenth Circuit reversed and remanded the district court’s decision, stating that there is no bright-line rule for determining when a medical judgment can serve as the basis for a FCA claim, but that a medical judgment may be “false or fraudulent” within the meaning of the FCA for at least three reasons. First, courts read the FCA broadly. Second, the fact that an allegedly false statement constitutes the speaker’s opinion does not disqualify it from forming the basis of FCA liability. Third, claims for medically unnecessary treatment are actionable under the FCA. For a Medicare claim to be reimbursable, it must meet the government’s definition of “reasonable and necessary,” as found in the Medicare Program Integrity Manual.  Thus, the court concluded that a doctor’s certification to the government that a procedure is “reasonable and necessary” is “false” under the FCA if the procedure was not reasonable and necessary under the government’s definition of the phrase.

The court held that for purposes of a motion to dismiss, Polukoff adequately alleged that Sorensen performed unnecessary medical procedures on patients and then knowingly submitted false certifications to the federal government that the procedures were necessary, all in an effort to obtain federal reimbursement.

Implications

United States v. AseraCare, 176 F. Supp. 3d 1282 (N.D. Ala. 2016), a case currently on appeal in the Eleventh Circuit, raises similar issues to those in the cases discussed above. The Eleventh Circuit heard arguments in this case in March 2017 and a ruling could be imminent.

In the meantime, the Paulus and Polukoff decisions make clear that a medical judgment can be false or fraudulent  under the FCA. Both courts emphasized that medical opinions may trigger liability for fraud when they are not honestly held by the holder of the opinion, or when the speaker knows of facts that are fundamentally incompatible with his or her opinion. This of course is a favorable result for would-be whistleblowers, and a cautionary tale for medical practitioners who must ensure that medical opinions that serve as the basis for reimbursement claims are well grounded and made in good faith.

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