Groat v. Boston Heart Diagnostics Corporation
Civil Action No. 2015-0487
| D.D.C. | Dec 11, 2017Background
- Relator Tina D. Groat sued Boston Heart Diagnostics under the federal False Claims Act and state analogs, alleging the company encouraged physicians to order medically unnecessary cardiac test panels and then billed government payors.
- On June 9, 2017, the court denied Boston Heart’s motion to dismiss most claims but dismissed reverse false claims; Boston Heart moved for reconsideration of the court’s statement that labs have an obligation to establish medical necessity for billed tests.
- Boston Heart relied on HHS/OIG guidance and Medicare recordkeeping regulation to argue laboratories cannot and should not be required to independently determine medical necessity.
- The court reconsidered and clarified that while laboratories must ensure they do not submit claims for unnecessary tests and certify medical necessity on the CMS‑1500, they may rely on the ordering physician’s determination of medical necessity rather than making independent clinical determinations.
- Despite this clarification, the court held the relator sufficiently pleaded falsity and scienter: allegations that Boston Heart marketed and designed requisition forms to induce non‑cardiology physicians to order unnecessary tests can support knowing submission of false claims.
- The court therefore granted the motion for reconsideration in part (clarifying the medical‑necessity point) and denied it in part (declining to dismiss the remaining presentment and false‑statement claims).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a laboratory must independently determine medical necessity before certifying claims | Lab submits false claims if it bills for tests that are not medically necessary; labs have a duty to ensure claims are medically necessary | Labs cannot and should not be required to make medical necessity determinations; they must be allowed to rely on ordering physicians | A lab need not make independent medical‑necessity determinations; it may rely on the ordering physician, but must still avoid submitting claims for unnecessary tests |
| Whether OIG Guidance and Medicare regulation require labs to independently verify medical necessity | OIG Guidance supports a lab duty to submit only medically necessary claims and to obtain supporting documentation | OIG Guidance and regulation recognize labs do not treat patients and cannot determine medical necessity | Court: OIG Guidance and regulation do not impose an independent clinical‑decision duty on labs; they permit reliance on physicians while requiring compliance practices |
| Whether relator pled falsity adequately given clarification about medical necessity | Allegations show Boston Heart certified tests as medically necessary though it induced unnecessary testing via marketing and requisitions | If labs may rely on physicians, relator cannot show falsity or scienter | Court: Allegations that Boston Heart encouraged unnecessary testing and designed requisitions and marketing to induce orders are sufficient to plead express falsity and knowledge at pleading stage |
| Whether relator pled scienter (knowledge/reckless disregard) for FCA claims | Meetings and internal practices show Boston Heart knew tests were unnecessary for many patients | Defendant argues lack of duty to independently assess undercuts scienter pleading | Court: Accepting allegations as true, relator sufficiently alleged knowing conduct (marketing, inducement, internal warnings) to satisfy scienter for now |
Key Cases Cited
- Merena v. SmithKline Beecham Corp., 205 F.3d 97 (3d Cir.) (laboratories can be sued under FCA for submitting claims for medically unnecessary tests)
- Lutz v. Berkeley Heartlab, Inc., 225 F. Supp. 3d 487 (D.S.C.) (denying motion to dismiss presentment claim where lab allegedly induced unnecessary panel testing)
- Downy v. Corning, Inc., 118 F. Supp. 2d 1160 (D.N.M.) (denying dismissal where deceptive requisition forms and misinformation allegedly induced unnecessary tests)
- Neifert-White Co. v. United States, 390 U.S. 228 (U.S.) (False Claims Act construed broadly to reach fraudulent attempts to cause government to pay)