United States Ex Rel. Polukoff v. St. Mark's Hosp.
895 F.3d 730
10th Cir.2018Background
- Relator Dr. Gerald Polukoff (qui tam) alleged Dr. Sherman Sorensen performed thousands of medically unnecessary PFO/ASD closure procedures and submitted Medicare/related reimbursement claims falsely certifying the services were "medically indicated and necessary."
- Dr. Sorensen allegedly performed an unusually high volume of PFO closures (e.g., 861 in 2010 vs. 37 at the Cleveland Clinic) and purportedly treated migraines and prophylactically closed PFOs contrary to AHA/ASA and hospital guidelines.
- Intermountain Healthcare investigated, suspended Dr. Sorensen for guideline violations, and audited cases finding many guideline breaches; St. Mark’s later recruited him despite knowledge of the suspension.
- Polukoff’s amended complaint alleged express false certifications on CMS Form 1500 and hospital cost reports, and that hospitals knowingly (or recklessly) submitted reimbursement claims for those procedures.
- The district court dismissed with prejudice under Rule 12(b)(6) and (9)(b), concluding medical judgment cannot be "false" absent a regulation specifying coverage; the Tenth Circuit reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a physician’s certification that a procedure is "reasonable and necessary" can be "false" under the FCA | Polukoff: Yes—if the procedure fails the government’s definition of "reasonable and necessary," the certification is legally false | Defendants: No—medical judgments and differing clinical opinions cannot be treated as false under the FCA absent a clear regulation limiting coverage | Court: Rejected defendants; a certification is false if the service was not "reasonable and necessary" under the government’s definition (Medicare Program Integrity Manual) |
| Whether relator pleaded express-false-certification claims with Rule 12(b)(6) sufficiency | Polukoff: Allegations (volume, guideline violations, audits, knowledge of noncoverage for migraines) sufficiently allege knowing submission of false claims | Defendants: Facts show only disputed medical judgment, insufficient to state legal falsity | Court: Allegations suffice to survive 12(b)(6) against physician and hospitals |
| Whether pleading met Rule 9(b) particularity as to corporate hospitals (Intermountain, St. Mark’s) | Polukoff: Specific factual allegations and excusable gaps (information in defendants’ control) satisfy 9(b); knowledge may be alleged generally | Intermountain/St. Mark’s: Complaint lacks who/what/when/where for corporate knowledge and billing | Court: 9(b) satisfied as to Intermountain and St. Mark’s; corporate knowledge can be established by agents/employees acting within scope of employment |
| Whether leave to amend was futile after dismissal | Polukoff: Should be allowed to amend to cure any pleading defects | Defendants: Dismissal with prejudice appropriate because claims fail as a matter of law | Court: Denial of leave based on futility was incorrect given complaint plausibly alleged falsity and scienter; therefore reversal and remand for further proceedings |
Key Cases Cited
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (FCA scope, materiality, and scienter guide limits on liability)
- Heckler v. Ringer, 466 U.S. 602 (1984) (agency can define reimbursement criteria via national or individual determinations)
- United States v. Neifert-White Co., 390 U.S. 228 (1968) (broad statutory reading of the FCA to reach all types of fraud)
- United States ex rel. Lemmon v. Envirocare of Utah, Inc., 614 F.3d 1163 (10th Cir. 2010) (FCA pleading standards and who/what/when/where/how specificity)
- United States ex rel. Thomas v. Black & Veatch Special Projects Corp., 820 F.3d 1162 (10th Cir. 2016) (distinguishing factually false and legally false claims; express vs. implied certification theories)
- United States ex rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d 370 (5th Cir. 2004) (medically unnecessary treatment can support FCA liability)
- Omnicare, Inc. v. Laborers Dist. Council Constr. Indus. Pension Fund, 135 S. Ct. 1318 (2015) (discussion of statements of opinion in fraud contexts)