US Ex Rel. Hobbs v. Medquest Associates, Inc.
812 F. Supp. 2d 821
M.D. Tenn.2011Background
- Relator Hobbs sues MedQuest entities and BioImaging centers under the FCA for falsely billing Medicare for diagnostic tests performed with inadequate physician supervision and, at the Charlotte center, for using Dr. Witt's Medicare billing number after an ownership change.
- Government intervened, asserting violations tied to IDTF supervising-physician requirements and improper use of a physician's billing number.
- IDTFs require supervising physicians with demonstrated proficiency; CMS carrier (CIGNA) approved some non-radiologists with training; MedQuest allegedly utilized non-approved physicians for contrast tests.
- Charlotte center allegedly operated under Dr. Witt’s physician practice/billing number prior to IDTF enrollment, with later failure to timely enroll/change ownership reporting to CMS.
- The court granted summary judgment to the United States on FCA theories, dismissed Relator’s retaliation claim as time-barred, and left other government/common-law theories unresolved on relief.
- Damages and penalties sought include substantial claims and backbilling issues related to the Charlotte center; the court reserved final damages computation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Must FCA liability rest on a statute or regulation violation | Hobbs/United States argue liability can attach via express/implicit certifications | MedQuest contends no express regulation prerequisite; carriers vary | Not required; certifications suffice; regulations support FCA liability |
| Were the Nashville IDTFs’ contrast tests supervised by Medicare-approved physicians | Disputed lack of approved physicians; Supervising-physician logs show unapproved coverage | Defendants argue any physician with proficiency suffices; CMS allows discretion | Summary judgment for United States; improper supervision violated Medicare rules and supported FCA liability |
| Did MedQuest's Charlotte billing with Witt’s number violate the FCA | Use of Witt’s number after ownership transfer constitutes false billing | Charlotte center later enrolled as IDTF; backbilling policy may apply | Yes; reckless disregard of enrollment/change-notice requirements; FCA liability shown |
| Is Relator's FCA retaliation claim time-barred | Timeliness depending on Dodd-Frank; ongoing employment relationship | At-will termination in 2004; statute of limitations applied | Relator’s retaliation claim time-barred under Tennessee law; summary judgment for Defendants on this claim |
| Are FCA claims predicated on statute/regulation violation required | Regulations/medical policies govern payment; certification implied | Some circuits require express regulation; others accept implied theories | Court adopts broader view; proof of express/implied certifications supports FCA liability |
Key Cases Cited
- United States ex rel. Augustine v. Century Health Services, Inc., 289 F.3d 409 (6th Cir. 2002) (FCA liability for false certifications and continuing duty to comply with regulations)
- United States ex rel. Mikes v. Straus, 274 F.3d 687 (2d Cir. 2001) (False certifications and noncompliance actionable under FCA)
- Hutcheson v. Blackstone Medical, Inc., 647 F.3d 377 (1st Cir. 2011) (Rejects requirement of express regulation precondition for FCA liability)
- United Technologies Corp. v. Pratt & Whitney, 626 F.3d 313 (6th Cir. 2010) (False claims can arise from misrepresentations related to government contracts)