United States Ex Rel. Feldman v. City of New York
808 F. Supp. 2d 641
S.D.N.Y.2011Background
- Relator Dr. Feldman filed a qui tam action alleging the City violated the False Claims Act by presenting false Medicaid-related claims and making false statements in connection with Personal Care Services (PCS).
- The United States intervened and the Court dismissed Feldman’s Amended Complaint while partially denying the City’s motion as to the Government’s FCA claims; Feldman’s standing was later addressed sua sponte by the Court.
- Medicaid is a joint federal-state program; New York’s DOH administers Medicaid and local districts like the City fund portions of the non-federal share; CMS-64 reports are submitted by the State to obtain federal reimbursement.
- PCS is regulated by NY DOH rules, requiring medical necessity, home safety, stability, and four assessments (physician’s order, nursing, social worker, and cost-effectiveness) with an independent medical review if disputes arise; some determinations are subject to ALJ review.
- Since 2000, about 17,500 individuals received 24-hour PCS; the City allegedly authorized and reauthorized sleep-in or split-shift PCS without proper LMD determinations or nurse/social worker assessments, relying on weekly authorization lists that DOH uses to prepare CMS-64 reports.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing of Feldman after intervention | Feldman retained standing for non-duplicative claims. | Feldman’s claims are duplicative of Government claims and superseded by intervention. | Feldman’s Amended Complaint dismissed for lack of standing. |
| Whether City caused submission of false CMS-64 claims | City’s weekly PCS authorizations causally led to CMS-64 submissions. | Causation is insufficient due to state ALJ reversals and intervening steps. | Plaintiff adequately pled that City proximately caused submission of false claims. |
| Whether CMS-64 reports contain false or fraudulent statements | CMS-64s falsely certify compliance with federal/state regulations by relying on improper City authorizations. | Allegations relate to state procedures rather than federal mandates for falsity. | CMS-64 reports contain (express/implied) false certifications and are material. |
| Implied/express false certification under FCA | By certifying expenditures were allowable, the CMS-64s impliedly certified compliance with governing rules. | Mikes limits implied certification and requires explicit statutory preconditions not clearly present. | Implied certification sufficiently alleged; express certification not required to fail under FCA; preconditions exist under state/federal regs. |
| Scienter: knowledge of falsity | City acted with deliberate indifference/reckless disregard due to systematic noncompliance. | Municipal incentives and self-interest do not support scienter; actions may be rationalized. | Plaintiff plausibly alleged City acted with knowledge or reckless disregard; scienter adequately pled. |
Key Cases Cited
- United States ex rel. Kirk v. Schindler Elevator Corp., 601 F.3d 94 (2d Cir. 2010) (fraud claims under FCA and scienter considerations)
- United States ex rel. Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001) (express vs implied false certification; medical provider context)
- Rainwater v. United States, 356 U.S. 590 (U.S. 1958) (FCA objective to protect government funds from false claims)
- Conner v. Salina Regional Health Center, Inc., 543 F.3d 1211 (10th Cir. 2008) (limitations on implied certification in healthcare FCA cases)
- Cook County, Ill. v. United States ex rel. Chandler, 538 U.S. 119 (U.S. 2003) (federal enforcement of FCA against municipalities considerations)
- United States v. Bornstein, 423 U.S. 303 (U.S. 1976) (causation and reliance in FCA context)