296 F. Supp. 3d 155
D.C. Cir.2017Background
- Relator Tina D. Groat, M.D., brought a qui tam action under the federal False Claims Act and analogous state statutes against Boston Heart Diagnostics, alleging the company encouraged medically unnecessary cardiac testing and billed government payors.
- The district court (Walton, J.) previously denied dismissal of presentment and false-statement claims under 31 U.S.C. § 3729(a)(1)(A) and (B), but dismissed reverse false-claims allegations under § 3729(a)(1)(G).
- Boston Heart moved for reconsideration, arguing the court erred by stating laboratories have an obligation to establish medical necessity for tests they bill Medicare for, citing OIG guidance and CMS regulations.
- The court reviewed OIG Compliance Program Guidance, the Medicare negotiated rulemaking and regulation (42 C.F.R. § 410.32), and relevant case law to reassess whether laboratories must independently determine medical necessity.
- The court clarified that while laboratories must ensure they do not submit claims for unnecessary tests and certify medical necessity on CMS-1500, they are permitted to rely on the ordering physician’s determination of medical necessity and may request supporting documentation from that physician.
- Despite that clarification, the court denied Boston Heart’s request to dismiss the relator’s presentment and false-statement claims because the complaint sufficiently alleges a scheme (marketing, pre-printed panels) to induce unnecessary test orders, satisfying falsity and knowledge pleading requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a laboratory must independently determine medical necessity before certifying claims | Groat: labs have a duty to submit only medically necessary claims; lab practices inducing unnecessary orders make claims false | Boston Heart: labs cannot and should not be required to determine medical necessity; they may rely on ordering physicians | Court: labs may rely on ordering physicians for medical necessity; they need not independently make determinations but must not submit knowingly unnecessary claims |
| Whether OIG guidance and CMS regulation impose independent medical-necessity duty on labs | Groat: OIG guidance supports a lab duty to ensure medical necessity and document it | Boston Heart: OIG guidance and CMS regulatory context show physicians, not labs, establish necessity | Court: OIG guidance and negotiated rulemaking show labs cannot treat patients and may rely on physician determinations; documentation/recordkeeping rules balance liabilities |
| Whether prior case law supports requiring labs to establish medical necessity | Groat: cited authorities indicating entities submitting claims bear the burden of showing necessity | Boston Heart: cited cases do not hold labs must independently determine necessity when claims are certified based on physician orders | Court: prior cases do not establish an independent lab duty; some decisions address billing entities broadly but not the lab-vs-physician determination question |
| Sufficiency of falsity and knowledge allegations against Boston Heart | Groat: allegations that Boston Heart marketed panels, used pre-printed requisitions, and encouraged non-cardiologists to order unnecessary tests show false certification and scienter | Boston Heart: if labs may rely on physicians, relator fails to plead falsity/knowledge adequately | Court: accepted allegations as sufficient — marketing and requisition practices could show the lab knowingly caused false claims; claims survive dismissal |
Key Cases Cited
- United States ex rel. Groat v. Boston Heart Diagnostics Corp., 255 F. Supp. 3d 13 (D.D.C. 2017) (district court opinion clarifying lab reliance on physician medical-necessity determinations and denying dismissal of FCA presentment/false-statement claims)
- United States ex rel. Merena v. SmithKline Beecham Corp., 205 F.3d 97 (3d Cir.) (laboratory liability under FCA for allegedly submitting claims for unnecessary tests)
- United States ex rel. Lutz v. Berkeley Heartlab, Inc., 225 F. Supp. 3d 487 (D.S.C. 2016) (denying dismissal where complaint detailed schemes to induce unnecessary testing)
- Neifert-White Co. v. United States, 390 U.S. 228 (U.S. 1968) (False Claims Act construed broadly to reach fraudulent attempts to cause the government to pay)
- Sikkenga v. Regence BlueCross BlueShield of Utah, 472 F.3d 702 (10th Cir. 2006) (noting limits and interactions of administrative coverage determinations)