United States Ex Rel. Ketroser v. Mayo Foundation
2013 U.S. App. LEXIS 18330
8th Cir.2013Background
- Relators (private qui tam plaintiffs) alleged Mayo billed Medicare for separate surgical pathology services (frozen and permanent slides) but often did not prepare a separate written report for the permanent slide that it billed.
- Mayo’s practice: prepare a frozen slide intraoperatively (with immediate diagnosis and a written initial report) and later prepare a permanent slide; if the permanent slide does not change the initial diagnosis, Mayo typically does not create a separate written report but may amend the initial report if needed.
- Government intervened and settled a related claim (billing for permanent slides not created/examined); Relators pursued an additional claim about failure to prepare separate written reports.
- District court held it had jurisdiction (no disqualifying public disclosure) but dismissed the failure-to-report claim under Rule 12(b)(6) for failure to plausibly allege FCA liability.
- Eighth Circuit affirmed: public-disclosure bar did not apply, but Relators’ allegations showed at most regulatory noncompliance, not plausible, knowing false claims, because Medicare/CPT rules do not clearly require a separate written report per permanent slide and Mayo’s interpretation was reasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FCA claim is barred by the public-disclosure rule | Relators: the specific practice (no separate written report for each billed permanent slide) was not publicly disclosed before the qui tam | Mayo: prior public sources (medical study, admin hearing, litigation filings) disclosed the practice | Court: public-disclosure bar did not apply; cited sources did not specifically disclose the alleged practice |
| Whether billing Medicare under CPT codes for permanent slides without preparing a separate written report states an FCA claim | Relators: CPT codes include “reporting,” which means a written report per billed slide; using the code without such a report is a false claim | Mayo: “reporting” is broader (any medium communicating conclusions); single case-level written report plus oral communications/addenda suffices; no material misrepresentation | Court: Dismissed — allegations amount to regulatory noncompliance; CPT and Medicare rules do not clearly require separate written reports per slide, and Mayo’s interpretation is reasonable, undermining requisite scienter |
| Whether use of CPT codes can give rise to FCA liability when services in code were not provided | Relators: using a CPT code implies the listed services were provided | Mayo: even if true in principle, the particular regulatory text here is ambiguous and Mayo’s interpretation was reasonable | Court: Assumed use of codes can give rise to liability but held Relators’ pleadings lacked plausible facts showing codes were knowingly misused; dismissal appropriate |
Key Cases Cited
- Rockwell Int’l Corp. v. United States, 549 U.S. 457 (construing FCA public-disclosure bar)
- Hays v. Hoffman, 325 F.3d 982 (plaintiff bears burden to establish jurisdictional facts)
- United States ex rel. Hixson v. Health Mgmt. Sys., Inc., 613 F.3d 1186 (reasonable interpretation of ambiguous law undermines FCA scienter)
- Minn. Ass’n of Nurse Anesthetists v. Allina Health Sys. Corp., 276 F.3d 1032 (public-disclosure requires revealing true state of facts and misrepresentation)
- Costner v. URS Consultants, Inc., 153 F.3d 667 (FCA liability attaches to the claim for payment)
- United States ex rel. Vigil v. Nelnet, Inc., 639 F.3d 791 (FCA does not encompass immaterial regulatory noncompliance)
- United States ex rel. Roop v. Hypoguard USA, Inc., 559 F.3d 818 (relator alleging systematic fraud must provide representative examples)
- United States ex rel. Raynor v. Nat’l Rural Utils., 690 F.3d 951 (plausibility standard for FCA claims)