A Florida district court (the “Court”) in United States v. AIMA Business and Medical Support, LLC held that a third-party medical billing company can be held liable under the False Claims Act (“FCA”) for pushing medically unnecessary genetic tests, even though it did not provide care directly to patients. This decision is important because it underscores that companies advising or facilitating health care providers’ billing practices can be targeted by the government if they knowingly encourage false claims, expanding the scope of FCA enforcement beyond direct health care providers. The Court rejected the company’s motion to dismiss, finding the government’s complaint sufficiently detailed to show intentional misconduct, including sample claims, communications urging higher-reimbursed tests and internal acknowledgment of illegal practices.
Background
A Miami-based laboratory hired the defendant, a medical billing company, to handle Medicare billing, provide Medicare billing guidance and keep the laboratory up-to-date on Medicare guidelines. The government alleges the defendant fraudulently billed Medicare for medically unnecessary genetic tests. This scheme involved requesting providers to order genetic tests with higher reimbursement rates, submitting false claims to the government and violating Medicare regulations. Internally, the company acknowledged these practices were “not logical and illegal,” but continued to submit claims to Medicare that totaled over $15 million billed in a single year.
To receive Medicare reimbursement, the service must be “reasonable and necessary.” Submitting a claim that is unreasonable and medically unnecessary constitutes a false or fraudulent claim. For the government to state a claim under the False Claims Act, codified at 31 U.S.C. § 3729, it must allege the defendant (1) presented a false or fraudulent claim, or caused one to be presented; (2) for payment or approval; and (3) with knowledge it was false.
Government’s FCA Claims Were Well-Pleaded
The defendant moved for the case’s dismissal, stating the complaint did not meet the minimum pleading requirements under Federal Rules of Civil Procedure Rule 9(b) and Rule 12(b)(6). Specifically, the defendant argued the complaint was a “shotgun pleading” that did not clearly indicate which claims were against the medical billing company and which were against the laboratory. The Court found this argument lacked merit because there was only one named defendant, the medical billing company, so each claim in the complaint clearly pertained to the billing company.
The defendant further argued the government failed to identify with particularity any false claims submitted and paid for by the government, failed to plead falsity and failed to plead scienter. The Court disagreed. The government’s complaint included sample Medicare claims that provided sufficient detail to show the billing company pushed the laboratory to promote genetic testing panels with higher reimbursement rates, the company knew the tests were conducted before the patient consulted a doctor, and demonstrated the billing company was aware of its regulatory violations. The Court found this evidence met the requirements of Rules 9(b) and 12(b)(6) and defeated the defendant’s particularity, falsity, and scienter arguments. Therefore, the Court held the government could proceed with its False Claims Act case.
Practical Takeaways
- Third-Party Billing Companies Fall Under False Claims Act: Even a third-party medical billing company can be charged under the False Claims Act, despite it submitting the claims on behalf of a health care entity.
- Particularity Requirements: Complaints must demonstrate particular circumstances where fraudulent claims were submitted to the government, but they do not necessarily require exact billing data to be well-pleaded.
If you have questions or would like more information about this topic, please contact:
- David Honig at (317) 977-1447 or dhonig@hallrender.com;
- Kennedy Bunch at (317) 977-1420 or kbunch@hallrender.com;
- Sarah Crosby at (317) 429-3663 or scrosby@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
