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United States v. Pekin Memorial Hospital

July 9, 2008

UNITED STATES OF AMERICA, PLAINTIFF,
v.
PEKIN MEMORIAL HOSPITAL, DEFENDANT.



The opinion of the court was delivered by: Joe Billy McDade United States District Judge

OPINION AND ORDER

Before the Court is a Motion to Dismiss (Doc. 44) and accompanying Memorandum (Doc. 45), and a Motion to Reconsider (Doc. 49) and accompanying Memorandum (Doc. 50), both filed by Defendant. Plaintiff has also filed a Response (Doc. 47 & 51) to each Motion. For the following reasons, the Motion to Reconsider is DENIED and the Motion to Dismiss is GRANTED.

The relator, Deborah Landrith, filed this qui tam action pursuant to the federal False Claims Act ("FCA"). 31 U.S.C. §§ 3729 -- 3733. Landrith was a billing coder specialist for Defendant from 1984 through 2002 and her responsibilities included Medicare billing for Defendant. According to Landrith's Complaint, Defendant intentionally miscoded certain procedures and committed other acts which defrauded the United State's Medicare program. Defendant previously filed a Motion to Dismiss which argued that Landrith had failed to describe the alleged fraud with the necessary specificity required by Federal Rule of Civil Procedure 9(b).

This Court held that Landrith's Complaint had described the fraud with the necessary level of specificity, but the Complaint failed to describe which individuals were involved with the fraud. Accordingly, the Court granted the Motion to Dismiss, but gave Landrith leave to amend her Complaint to include the names of individuals involved in the fraud and descriptions of their involvement.

Landrith has now filed a Second Amended Complaint and Defendant has filed a new Motion to Dismiss. In addition, after our Appellate Court issued a decision in United States ex rel. Fowler v. Caremark RX, LLC, 496 F.3d 730 (7th Cir. 2007), Defendant filed a Motion to Reconsider in which they argued that the Seventh Circuit has filled in gaps in the law which require this Court to reconsider its previous ruling that Landrith had described the fraud with the necessary level of specificity. These two Motions are currently pending before the Court.

I. BACKGROUND

Landrith's Second Amended Complaint describes four specific areas where Defendant engaged in fraudulent activity in violation of the FCA. Count I states that Defendant falsely coded pre-operative testing as diagnostic testing. Specifically, Defendant would often code routine preoperative tests such as a complete blood count, a chemistry profile, prothrombin*fn1 , urinalysis, electrocardiogram and chest radiographs as diagnostic tests. According to the Complaint, these tests were ordered to determine if the patient was a suitable surgical candidate and had no relation to a treatment or illness for the surgical candidate. (Doc. 41 at 4-6.) Despite the fact that the tests were only intended to determine if the patient was a suitable candidate for surgery, the tests were fraudulently billed as diagnostic tests so that they would be covered by Medicare.

Count II discusses prostate screening exams. Under the Medicare program, only certain prostate screening exams are covered by Medicare. For example, only one prostate specific antigen test per year is covered for patients with lower urinary tract signs or symptoms for men under 50 who show no change in their symptoms. However, certain tests are always covered, such as tests performed on a patient who has an enlarged prostate that is causing him transient or chronic incontinence. In this case, so that Defendant would be reimbursed for all prostate screening tests, even those that they were not entitled to payment, the bill coders were directed to fraudulently code all prostate tests as tests on an individual who had an enlarged prostate that was causing him transient or chronic incontinence.

Count III discusses mammograms. Certain mammograms are covered depending upon a patient's age, history and symptoms. 42 C.F.R. § 410.34. However, all tests are covered if they are performed on a patient who has a lump in her breast. According to the Complaint, bill coders were directed to fraudulently code all mammograms as if they had been performed on a patient with a lump or mass in the breast, so that the test would be covered by Medicare.

Finally, Count IV discusses fraudulent signatures. According to the Complaint, Defendant would submit claims to Medicare with signatures that were forged and unauthorized. Specifically, she observed Medicare claims that were filed with a signature stamp bearing her name that she had never processed. In addition, she personally observed claims that bore the electronic signature of a billing specialist named Marsha Mettam. This is significant because these claims were dated as late as six months after Mettam's death. According to the Complaint, the government is entitled to a civil penalty for each of the fraudulently signed claims.

Finally, Counts V through IX restate the same facts but allege common law claims including unjust enrichment, payment by mistake of fact, and common law fraud.

II. ANALYSIS

A. Motion to Reconsider

Before turning to the issues raised in Defendant's Motion to Reconsider, it is necessary to recap this Court's reasoning behind the previous ruling on ...


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