929 F. Supp. 2d 245
S.D.N.Y.2013Background
- Relator Associates Against Outlier Fraud sues Huron and Empire under FCA and NY False Claims Acts over Medicare outlier reimbursements to St. Vincent’s.
- Medicare outlier payments depend on a cost-to-charge ratio (CCR) that is retrospective and can lag behind current charges.
- St. Vincent’s increased charges in 2004, then filed for bankruptcy in 2005; outlier payments continued based on stale CCR.
- Empire, as Medicare fiscal intermediary, flagged providers for potential outlier reconciliation but CMS guidance and tools were not issued until 2011.
- Relator argues Huron caused fraudulent billing and Empire facilitated false claims; court grants summary judgment for both defendants.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Liability for Huron based on stale CCR charges | Huron used stale CCR to inflate outliers, falsely certifying compliance | No statute/regulation required proportional charge increases; no false claim | No liability; no enforceable rule of proportionality or false-claim basis |
| Liability for Empire as fiscal intermediary | Empire ignored signs of fraud and forwarded claims | Empire flagged aberrant outliers and CMS guidance was lacking; no false claim | No liability; no false or legally false claim by Empire |
| Implied/express certification theory viability | Outlier practice violated underlying statutes/regulations requiring compliance | Regulations do not impose express requirement; no implied certification</br>that would render payments false | No liability under either express or implied certification theories |
| Existence of a proportionality rule governing charge adjustment | Law requires charges to relate proportionally to costs | No statutory/regulatory proportionality rule; outlier reconciliation is retrospective | No proportionality rule; claims not per se false |
Key Cases Cited
- Schindler Elevator Corp. v. United States ex rel. Kirk, 131 S. Ct. 1885 (U.S. 2011) (establishes FCA pleading standards and knowledge requirements)
- Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001) (true falsity and certification concepts under FCA)