334 F. Supp. 3d 349
D.D.C.2018Background
- Relator James Allen, a Medicare beneficiary on warfarin, alleges home INR testing providers required 2–4 tests/month, inducing medically unnecessary testing and false Medicare claims.
- Eight defendants: two "Test-Providing" (Alere, Roche) who actually supplied Allen; five "Willing Provider" (Cardiolink, ACS, PHM, USHS, mdINR) who were willing to provide kits; Tambra stayed.
- Allen alleges defendants pressured physicians via pre-printed enrollment forms and marketing, removed lower-frequency options, and billed Medicare under HCPCS G0249 (which covers provision of home test materials and reporting, up to once/week).
- Allen attached some billing records and physician forms; United States declined to intervene. He pleads FCA counts (presentment, false statements, reverse false claims) plus common-law claims for mistake and unjust enrichment.
- The court applied Rule 9(b), First Circuit FCA standards (materiality and scienter per Universal Health Servs.), and Medicare coverage/regulatory requirements (physician order, face-to-face training, frequency limits).
Issues
| Issue | Allen's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pre-printed enrollment forms that limit frequency render submitted Medicare claims false (certification of medical necessity) | Forms induce physicians to order unnecessary tests; therefore claims submitted on those forms are false | Forms alone do not show submission of false claims or scienter; physicians exercise independent medical judgment; need particularized examples | Generally rejected for most "Willing Provider" defendants for lack of particularized claims; exception for Cardiolink (DVD training) and ACS (false statement re: Medicare recommending weekly testing) where allegations met relaxed pleading standard |
| Whether relator pleaded false-certification claims with Rule 9(b) particularity and scienter | Allegations and some company documents/statistics suffice to show scheme and knowing/reckless conduct | Absent specific false claims and examples, claims are speculative and fail Rule 9(b) | Rule 9(b) dismissal granted for PHM, USHS, mdINR; allowed in part for Cardiolink and ACS; Alere survives as to specific claims and facts pleaded about Allen |
| Whether Alere caused submission of false claims for medically unnecessary testing and met materiality/scienter | Alere enrolled Allen despite his written statements and stable results; billing records show repeated biweekly claims; form changes increased risk of unnecessary testing | Reliance on physician judgment; public disclosure bar; some disputed billing-entry facts | Alere's medical-necessity theory and billing-code theory survive the motion to dismiss (materiality/scienter plausibly alleged; billing entries require factual development) |
| Whether billing/reporting practices (physicians receiving results only monthly or only if out-of-range) violate HCPCS G0249 and are material | Offering those reporting options contradicts G0249's reporting requirement and results in false claims | No specific examples of physicians selecting those options; G0249 does not fix reporting frequency; materiality not shown | Dismissed: relator failed to allege specific instances and materiality under Universal Health Servs. |
| Whether relator may pursue common-law claims (mistake of fact, unjust enrichment) | Seeks recovery tied to alleged overpayments to Medicare | Relator lacks direct injury; harms are to the government | Dismissed for lack of standing; common-law claims barred in qui tam context |
Key Cases Cited
- Hagerty ex rel. United States v. Cyberonics, Inc., 844 F.3d 26 (1st Cir. 2016) (Rule 9(b) particularity and FCA fraud components)
- United States ex rel. Jones v. Brigham & Women's Hosp., 678 F.3d 72 (1st Cir. 2012) (broad view of falsity and certification under the FCA)
- Universal Health Servs., Inc. v. United States, 136 S. Ct. 1989 (U.S. 2016) (demanding materiality and FCA scienter standard)
- United States ex rel. Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29 (1st Cir. 2017) (relaxed pleading where defendant induced third parties; need reliable indicia claims were submitted)
- D'Agostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016) (necessity of alleging actual false claims to state FCA violation)
- United States ex rel. Groat v. Boston Heart Diagnostics Corp., 255 F. Supp. 3d 13 (D.D.C. 2017) (pre-printed test panels/requisition forms can create FCA liability where defendant knew tests were unnecessary)
- United States v. Berkeley Heartlab, Inc., 225 F. Supp. 3d 487 (D.S.C. 2016) (use of requisition forms and marketing to induce unnecessary tests supports FCA theory)