Thomas Parker, Jr. v. Sea-Mar Community Health Ctr.
20-35825
| 9th Cir. | Jul 13, 2021Background:
- Relator Parker sued Sea Mar Community Health Center under the False Claims Act, alleging Sea Mar defrauded Medicaid by "unbundling" dental cleanings from exams and billing cleanings under the supervising dentist’s NPI rather than the hygienist’s.
- Sea Mar moved to dismiss under Federal Rule of Civil Procedure 12(b)(6); FCA fraud claims require the heightened pleading standard of Rule 9(b).
- The district court dismissed for failure to state a claim; Parker appealed and the Ninth Circuit reviewed the dismissal de novo and affirmed.
- The court found no statutory, regulatory, or guidance prohibition on scheduling exams and cleanings as separate encounters or on billing under a supervising dentist’s NPI when the services are jointly provided and the dentist supervises the hygienist.
- The court held Parker also failed to plead the requisite scienter (knowledge/intent) and failed to plead materiality, particularly because Washington’s Medicaid authority knowingly paid the claims after seeing the codes and NPI on the claim forms.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "unbundling" (separate scheduling/billing of cleanings) and billing under dentist NPI constitutes a false statement / FCA violation | Parker: Unbundling and using dentist NPI misrepresents services to Medicaid and is fraudulent | Sea Mar: Scheduling separate visits and billing under dentist NPI is allowed by law/guidance where dentist supervises hygienist | Held: Not a legally cognizable FCA theory; practices are not prohibited, so not false under FCA |
| Whether use of supervising dentist’s NPI for hygienist-performed cleanings is improper | Parker: Using dentist NPI for hygienist services misstates provider and is fraudulent | Sea Mar: Dentist supervision permissibly supports billing under dentist’s NPI; hygienist bills only when independent | Held: Use of dentist NPI not prohibited; billing consistent with Washington law |
| Whether Parker adequately pleaded scienter (knowledge and intent) | Parker: Conduct was fraudulent; scienter can be inferred | Sea Mar: Practices are lawful/authorized, so no knowing false submission | Held: Failed to plead scienter because defendants could reasonably believe claims were lawful |
| Whether Parker pleaded materiality of alleged falsehoods | Parker: The misstatements were material to Medicaid payment decisions | Sea Mar: Washington Health Care Authority reviewed and paid claims with knowledge of codes/NPI, undermining materiality | Held: Materiality not adequately pleaded; government’s payment is strong evidence the alleged conduct was immaterial |
Key Cases Cited
- Godecke ex rel. United States v. Kinetic Concepts, Inc., 937 F.3d 1201 (9th Cir. 2019) (describing bases for Rule 12(b)(6) dismissal)
- Balistreri v. Pacifica Police Dep’t, 901 F.2d 696 (9th Cir. 1988) (pleading standards under Rule 12(b)(6))
- Winter ex rel. United States v. Gardens Reg’l Hosp. & Med. Ctr., Inc., 953 F.3d 1108 (9th Cir. 2020) (FCA claims must satisfy Rule 9(b))
- United States v. United Healthcare Ins. Co., 848 F.3d 1161 (9th Cir. 2016) (requirement to plead the who, what, when, where, and how of fraud)
- Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993 (9th Cir. 2010) (particularity requirement for fraud allegations)
- United States ex rel. Hendow v. Univ. of Phoenix, 461 F.3d 1166 (9th Cir. 2006) (scienter requirement in FCA claims)
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (materiality standard for FCA claims; government’s full payment is strong evidence of immateriality)