United States v. Acacia Mental Health Clinic, LLC
836 F.3d 770
| 7th Cir. | 2016Background
- Relator Rose Presser, a nurse practitioner, sued Acacia Mental Health Clinic, LLC and owner Abe Freund under the federal False Claims Act and Wisconsin FCA alleging systematic overbilling and submission of false claims to Medicare/Medicaid based on clinic billing policies.
- Presser alleges Acacia required a four-step patient assessment (receptionist, medical nurse practitioner, psychotherapist, nurse practitioner), billed each step, mandated urine drug screens at every visit, enforced in-person refill/appointment policies, and directed use of CPT code 90801 for assessments even when full psychiatric evaluations were not performed.
- She alleged these policies were medically unnecessary and resulted in higher government billing; she identified several unnamed patient examples and stated Acacia’s 2011 revenue was roughly double what she calculated it should have been.
- Defendants moved to dismiss under Rules 9(b) and 12(b)(6) for failure to plead fraud with particularity; the district court dismissed the amended complaint in full and denied further amendment.
- The Seventh Circuit affirmed dismissal except reversed as to claims alleging misuse of billing code 90801, holding those allegations pleaded the who/what/when/where/how sufficiently and remanding; other unnecessary-care claims were dismissed for lack of contextual particularity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint sufficiently alleges defendants presented false claims to federal/state governments under FCA/WFCA | Presser alleged Acacia billed Medicare/Medicaid for services under clinic policies; statements by Freund and clinic practice show billing to government | Defendants said complaint fails to allege any specific submission to government payors | Court: Plaintiff sufficiently alleged that Acacia billed Medicare/Medicaid; inference permitted given her role and facts (Lusby/Leveski cited) |
| Whether use of CPT code 90801 was pleaded with Rule 9(b) particularity | Presser alleged specific instruction to use 90801 for non-psychiatric encounters (receptionists, MNPs), billing resulted in false representation of psychiatric evaluations | Defendants argued insufficient particularity to show false statement to gov't | Court: Sufficient — these allegations are concrete, describe an express false representation, and survive Rule 9(b) |
| Whether claims that other policies (four-step assessments, mandatory drug screens, refill rules) amounted to billing for "not reasonable and necessary" services were pleaded with particularity | Presser relied on her clinical experience and identified example patients to show services were unnecessary | Defendants argued allegations are conclusory, lack medical/industry context or comparators and could have innocent explanations | Court: Insufficient — complaint lacked external standards, contextual data, or concrete factual basis beyond relator’s subjective judgment; dismissed under Rule 9(b) |
| Whether denial of further leave to amend was an abuse of discretion | Presser did not challenge denial on appeal (waived) but suggested further amendment might be appropriate given partial reversal | Defendants argued prejudice and district court already gave one amendment opportunity | Court: Declined to revisit; issue waived on appeal, but district court may reconsider amendment in light of remand at its discretion |
Key Cases Cited
- United States ex rel. Lusby v. Rolls-Royce Corp., 570 F.3d 849 (7th Cir.) (inference that defendant presented claims to government allowed where facts make submission reasonably understood)
- Leveski v. ITT Educ. Servs., Inc., 719 F.3d 818 (7th Cir.) (relaxed particularity when relator lacks access to billing records; inference may suffice)
- Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436 (7th Cir.) (Rule 9(b) requires contextual facts or data to make allegations of systematic overbilling plausible)
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (U.S.) (use of reimbursement codes can constitute express misrepresentations to government when they imply provision of specific services)
- Fid. Nat’l Title Ins. Co. v. Intercounty Nat’l Title Ins. Co., 412 F.3d 745 (7th Cir.) (Rule 9(b) serves to deter spurious fraud claims and requires sufficient particularity for defendant to respond)