A number of recent FCA decisions have grappled with the question of objective falsity, particularly in the context of FCA claims where the alleged falsity is premised on a lack of medical necessity in connection with the medical services provided. The most recent in this line of cases considered whether a relator alleging nothing more than a difference of medical opinion regarding medical necessity of a particular cardiac procedure failed to plead objective falsity as required to state an FCA claim as a matter of law.
In U.S. ex rel. Polukoff v. St. Mark’s Hospital, 2017 WL 237615 (D. Utah Jan. 19, 2017), the relator alleged that a cardiologist and two Utah hospitals fraudulently billed the government for medically unnecessary cardiac procedures involving the surgical closure of a patent foramen ovale (PFO), which is a “a small opening in the wall separating the two upper chambers of the heart” that exists in about 25% of the population and is typically asymptomatic. Adults with a PFO have an increased risk of suffering a stroke; although, according to the district court, “[o]pinions regarding the use of a PFO closure to prevent strokes have varied over the past decade.”
The relator, a physician himself, alleged that the defendant cardiologist had performed more PFO closures than other physicians because it was believed the procedure: (1) prevented patients from suffering a stroke; and (2) treated chronic migraines. During the relevant time period, however, there were no local or national coverage determinations in place relevant to determining whether PFO closures were “reasonable and necessary.” The relator made only the assertion that unspecified Medicare contractors “follow [American Heart Association (AHA)/American Stroke Association (ASA)] Guidelines” and pinned falsity on the allegation that the defendant cardiologist failed to perform PFO closures “in accordance with generally accepted standards of care.” The relator otherwise failed to articulate facts that would support plausible inferences of objective falsity; rather, the district court concluded that the relator offered only his own subjective assessment as to when and under what circumstances PFO closures would be appropriate.
The district court likewise rejected the relator’s arguments based upon: (1) “AHA/ASA Guidelines” and internal hospital guidelines; (2) the “sheer number” of PFO closures performed by the defendant cardiologist; (3) medical staff reviews and disputes; and (4) the relator’s own review of patient and billing records. The district court explained that Medicare does not require compliance with industry standards as a precondition of payment, nor could the violation of such a standard, without more, form the basis for FCA liability.
The district court granted the defendants’ motions to dismiss with prejudice and denied the relator’s request for leave to amend the complaint, explaining that the central defect of the complaint—the theory that liability could be premised on the defendants’ allegedly misrepresenting that PFO closures were reasonable and necessary—could not be cured.
As more and more FCA cases pose questions of medical necessity, it is critical that district courts focus on weeding out FCA cases premised on nothing more than a subjective difference of opinion – even where that opinion is offered by a physician. To this end, the district court’s opinion in Polukoff appropriately cautions that “[o]pinions, medical judgments, and conclusions about which reasonable minds may differ cannot be false for the purposes of an FCA claim” and that FCA “liability may not be premised on subjective interpretations of imprecise statutory language such as medically reasonable and necessary.” Applying such a level of scrutiny to the question of falsity has become an important litmus test for what has become an increasingly common FCA theory of liability.