ORDER
THIS MATTER came before the Court on Defendants Lineare Holdings, Inc. and Lineare, Inc. d/b/a Diabetic Experts of America’s motion for summary judgment (Lineare, Inc. is referred to as “Lineare;”
(I) Background
The dispute in this case involves how Diabetic Experts marketed its diabetic testing supplies to six Medicare beneficiaries and then billed Medicare for the supplies that it provided. (Second Amended Complaint (“SAC”) DE 43). Relators did not plead facts indicating that Diabetic Experts failed to send the billed-for
For the reasons discussed below, the Court grants Defendants’ motion for summary judgment on the six exemplars. The Court concludes that Lineare and Diabetic Experts are a single supplier for the purposes of the Medicare statutes, regulations, and supplier standards at issue and that their reliance on AOBs for provision of diabetic supplies was not inconsistent with the Center for Medicare and Medicaid Services’ (“CMS”)
(I)(A) Pertinent Medicare Statutes And Regulations
“The Medicare Program is a system of health insurance administered by the United States Department of Health and Human Services, through the Center for Medicare and Medicaid Services.” See United States ex rel. Walker v. R & F Props, of Lake Cnty., Inc.,
(I )(A)(1) Defínition of DMEPOS: Supplies and Equipment
Medicare Part B pays for “covered items.” 42 U.S.C. § 1395m(a)(13) (“[T)he term ‘covered item’ means durable medical
Under the subheading of “payment for durable medical equipment,” 42 U.S.C. § 1395m provides that testing strips are included in diabetic supplies, which is a subset of durable medical equipment. 42 U.S.C. §. 1395m(a)(l)(H)(i) (“[T]he payment amount under this part for diabetic supplies, including testing strips, ... shall be equal to the single payment amounts established ... under section 1395w-3 of this title.”). As referenced, 42 U.S.C. § 1395w-3(a)(2)(A) ■ describes “durable medical equipment and medical supplies” as “covered items (as defined in section 1395m(a)(13) of this title),” including '“supplies used in conjunction with durable medical equipment.” Thus, the terms supplies and equipment are both used when referring to items like blood-testing strips. While the statutes describe general categories of covered items, including durable medical equipment, the applicable regulations provide a more precise definition that is informed by the expertise of CMS.
Supplies are those items necessary for the effective use of durable, equipment. 42 C.F.R. § 414.402(2). The Medicare regulations define durable medical equipment as “equipment furnished' by a supplier [that] can withstand repeated use.” 42 C.F.R. § 414.202(1). Thus, the applicable regulations support a distinction between equipment as reusable implements and supplies as materials that may be used to replenish or augment the equipment. This represents a qualitative judgment by CMS that distinguishes equipment, which can withstand repeated usage, from more ephemeral supplies. As a result, “[supplies necessary for the effective use of DME” are listed separately from durable medical equipment in the regulations. 42 C.F.R. § 414,402; see also 42 C.F.R. § 400.202 (definitions specific to Medicare: “Services means medical care or services and items, such as ... supplies, appliances, and equipment.”).
(T)(A)(2) DMEPOS Supplier Rules
Title 42 C.F.R, § 424.57 sets out the “special payment rules for items furnished by DMEPOS suppliers and issuance of DMEPOS supplier billing privileges.” A DMEPOS supplier is “an entity or individual, which sells or rents Part B covered items to Medicare beneficiaries and which meets the standards in paragraphs (c) and (d) of this section.” 42 C.F.R. § 424.57(a). In addition to meeting those standards, all DMEPOS suppliers must also comply with the general rules in paragraph (b) of the section in’ order to be eligible to participate in Medicare and receive payment for a covered item. See 42 C.F.R. § 424.57(b).
(l )(A)(2)(a) Supplier Identifícatíon
The general rules found in section (b) of the DMEPOS supplier special payment rules require that the supplier meet certain conditions to be “eligible to receive payment for a Medicare-covered item.” 42 C.F.R. § 424.57(b). One such condition is that a supplier is not eligible to be paid unless it obtains a supplier number. See 42 U.S.C. § 1395m(j)(l)(A). Accordingly, before submitting claims to Medicare, each DMEPOS-selling business location that meets the eligibility requirements receives a supplier number from the National Supplier Clearinghouse (“NSC”).
Furthermore,- pursuant to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), suppliers are required to obtain National Provider Identifiers (“NPI”)
The subpart enrollment requirement is echoed elsewhere in the. DMEPOS supplier special payment rules, which: provide that a supplier must enroll each “separate physical location it uses to furnish Medicare-covered DMEPOS” and that “CMS issues only one supplier number for each location.” 42 C.F.R.' § 424.57(b). Although all DMEPOS • supplier subparts must comply with the “DMEPOS quality standards and be separately accredited,” the regulations make provision for how “multisite supplier^]” can satisfy those standards. See id. CMS has spoken clearly on the topic in a Special CMS Communication Regarding the NPI and Medicare DME Suppliers: “Medicare DME suppliers are required to obtain an NPI for every location.”
The Subpart Paper was explicit in both its purpose and guidance. CMS stated that “[t]his- paper reflects- the Medicare program’s expectations on how its enrolled organization health care providers who are covered entities under HIPAA will determine, subparts and obtain NPIs for themselves and any subparts.” See Subpart Paper at 1. The Subpart Paper directed that “[e]ach ¿nrolled supplier of DMEPOS that is a covered entity under HIPAA must designate each practice location (if it has more than one) as a subpart and ensure that each subpart obtains its own unique NPI.” Id. at 8. The result is that a supplier must determine how to apply for NPIs, but “Medicare regulations require that each practice location of a supplier of DMEPOS (if it has more than one) must, by law, be separately enrolled in Medicare and have its own unique Medicare identification number.” Id. Therefore, it is clear that a single supplier can have multiple subparts that have their own NPIs. Id.; see also Medicare Program; Additional Supplier Standards, 65 Fed.Reg. 60366-01, 60371 (Oct. 11, 2000) (to be codified at 42 C.F.R. Part 424) (noting that “some suppliers may have multiple sites from which they do business”).
(I)(A)(2)(b) Prohibition On Unsolicited Telephone Contacts
- The standards require that the supplier operate its business and furnish covered items in compliance with “federal regulatory requirements that specify requirements for the provision of DMEPOS.” 42 C.F.R. § 424.57(c). The supplier standard at issue in this case is 42 C.F.R. § 424.57(c)(ll), which requires a supplier
Under both the statute and the regulation, a supplier is prohibited from making unsolicited telephone contacts with customers who are enrolled in Medicare unless one of three exceptions applies:
(i) The individual has given written permission to the supplier to make contact by telephone regarding the furnishing of a covered item.
(ii) The supplier has furnished a covered item to the individual and the supplier is contacting the individual only regarding the furnishing of such covered item.
(iii) If the contact is regarding the furnishing of a covered item other, than a covered item already furnished to the individual, the supplier has furnished at least 1 covered item to the individual during the 15-month period preceding the date on which the supplier makes such contact.
42 U.S.C. § 1395m(a)(17); 42 C.F.R. § 424.57(c)(ll). Only the third exception is at issue here. ■
(I)(A)(2)(c) Assignment Of Benefits And Maintaining Signatures On File
One of the other federal regulatory requirements identified in 42 C.F.R. § 424.57(c) that governs suppliers is that a claim submitted to Medicare on behalf of a customer must be authorized by that customer. This authorization can be made by the Medicare beneficiary customer’s signature on the claim. See 42 C.F.R, § 424.36. In the alternative, there is a procedure where “Medicare pays the supplier for covered services if the beneficiary .-.. assigns the claim to the supplier and the' supplier accepts assignment.” 42 C.F.R. § 424.55(a).' Consequently, a beneficiary need not sign every single claim or individually assign each one. Rather, a supplier may maintain the customer’s signature on file using a form “that contains adequate notice to the beneficiary ... that the purpose of the signature is to authorize a provider or supplier to submit a claim to Medicare for specified services furnished to the beneficiary.” 42 C.F.R. § 424.36(a). The CMS Claims Manual does not require “that the services be itemized or that the information submitted be complete.” (CMS Claims Processing Manual Ch. 1 § 50.1.7 — Definition of Claim for Payment DE 206-2 at 2)/
The authorization may be incorporated by reference into subsequent claims. See 42 C.F.R. § 424.40(a). Furthermore, the supplier can retain an authorization in the supplier’s file, which “may be effective indefinitely.” 42 C.F.R. § 424.40(d). The indefinite effectiveness provision is not unlimited, however, and “a new statement is required if another item of equipment is rented or purchased.” 42 C.F.R. § 424.40(d)(2).
(I)(B) Relevant Facts Not In Material Dispute
During the time period at issue,
Relators begin from the premise that Diabetic Experts is a separate supplier from Lineare. (SAC DE 43 ¶2). Although the Parties vigorously dispute whether Lineare and Diabetic Experts are, as a matter of law, separate suppliers for the purposes of Medicare eligibility, marketing, billing, and the propriety of using general AOBs, the following facts are un-controverted. (See, e.g., DE 101 ¶ 12; DE 199 ¶¶ 4, 8, Additional Facts ¶¶ 2-5, 11, 13, 15, 18, 21, 26, 29-31; DE 207 at 1-3). On March 18, 2004, Lineare registered the fictitious name Diabetic Experts of America to do business in Missouri. (DE 75 ¶ 10; Affidavit of Don Crisp, Director of Taxes, Lineare Holdings, Inc. DE 75-1 ¶ 15). There is no separate Diabetic Experts of America company, affiliate, or entity listed on Holdings’ corporate organization chart for 2008 or 2009 (DE 100-11 at 2-3); Diabetic Experts is a fictitious name used by Lineare. (Crisp Aff. DE 75-1 ¶ 16; DE 75 ¶ 12; DE 101 ¶ 6 (“It is undisputed that ‘Diabetic Experts of America’ is a d/b/a of Lineare, Inc.”)).
Lineare’ registered with the NSC as a DMEPOS supplier, (DE 75 ¶ 7). Lineare maintains' subparts like Diabetic Experts throughout the United States. (Id. ¶¶9, 17; see also Affidavit of Stacey Murphy, Division Reimbursement Manager, Lin-eare Holdings, Inc. DE 195-6 ¶ 9 (testifying that Lineare has over 800 subparts operating throughout the United States, each, with its own unique-NPI)). In accordance with the Medicare statutes and regulations, Lineare enrolled each of those subparts with the NSC. (DE 75 ¶ 9). In 2004, Lineare enrolled its Kansas City, Missouri brand, Diabetic Experts, with the NSC and obtained an NSC number for it. (Id. ¶ 10). Lincare’s 2004 CMS-855S enrollment form for its Kansas City subpart reflected that: .(a) Lineare was enrolling a “New Location for a Currently Enrolled DMEPOS Supplier”; (b) the legal name of that business was “Lineare Inc., d/b/a Diabetic Experts of America”; and (c) the Tax ID number used for the “Supplier IRS Identification” information was Lincare’s: nó. xx-xxx2900. (Id. ¶ 10). During one onsite inspection of Diabetic Experts, NSC completed- the field for supplier name: “Lineare, Inc.” (May 19, 2014 NSC onsite inspection of Diabetic Experts DE 100-5 at 2). In 2006, Lineare also obtained an NPI for Diabetic Experts. (DE 75 ¶ 15).
At each subsequent NSC inspection, Diabetic Experts certified that it had been provided with a copy of the supplier standards (listed in 42 C.F.R. § 424.57(e)) and acknowledged that its NSC number could be revoked if, at any time, it was determined that Diabetic Experts was noncom-pliant. (See May 19, 2014 NSC onsite inspection of Diabetic Experts DE 100-5 at 6; see also Mar. 22, 2012 NSC onsite inspection of Diabetic Experts DE 100-5 at 26). Diabetic Experts also agreed to “abide by the Medicare laws, regulations, and program instructions applicable to DMEPOS suppliers.” (2004 CMS-855S enrollment form DE 75-2 at 34). Diabetic Experts further expressed its understanding that “payment of a claim by Medicare is conditioned upon the ciaim and the underlying transaction complying with such laws, regulations, and program insteuc-
; During 2008 and 2009, Relators
Diabetic Experts then made the sales to the beneficiaries and submitted claims to Medicare for diabetic-testing supplies, e.g,, testing strips and lancets used in testing blood glucose levels, which Medicare paid relying on the fact that the telephone contacts and AOBs were both compliant with applicable statutes and regulations. (DE 75 ¶ 20). Diabetic Experts used its NPI, which is different from Lincare’s, to bill Medicare for the diabetic testing supplies on behalf of the six exemplar beneficiaries. (DE 199 Additional Facts- ¶¶ 11,15).
The sales history is represented in a table, below:
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(DE 75 ¶ 20).
There is no material dispute about three salient facts presented by the exemplars. (DE 101 ¶20 (“The content of the sales history with the six exemplars is undisputed.”)). First, Diabetic Experts contacted the beneficiaries, sold the supplies, and billed Medicare. (DE 75 ¶20). Second, Diabetic Experts billed for testing strips, lancets, disposable lancet devices, and testing solution, but not for the diabetic-testing monitor.
Before the sale of diabetic supplies to the six exemplar Medicare beneficiaries, each of the six beneficiaries executed a patient agreement and consent form that contained, among other things, an assignment of benefits in favor of Lineare and its affiliates. (DE 75 ¶ 33). In those consent forms, the six beneficiaries agreed: (i) to rent or purchase covered items from either “Lineare and its affiliates” or from “Supplier and its affiliates”; (ii) that Lineare would provide “HME and Supplies” or “DME;” (iii) to the release of their health
The consent forms, which the Parties and the Court have referred to as the AOBs, provided that they were to be used in lieu of the beneficiaries’ signatures on claims forms and Lineare kept them on file for this purpose. (DE 75 35-36). Diabetic Experts used the AOBs as signatures on file for the claims it submitted to obtain payment from Medicare for the diabetic testing supplies sold to the six exemplar Medicare beneficiaries. (DE 75 ¶ 37; DE 199 Additional Facts ¶¶ 16-18, 20, 31, 33-34). Although Diabetic Experts had its own form AOBs, it is undisputed that it “did not obtain AOBs that were specifically for diabetic testing supplies from Medicare beneficiaries — including the six exemplar beneficiaries — for its claims to Medicare for payment,” but rather used the Lineare AOBs it had on file. (DE 199 Additional Facts ¶¶ 32-33, 36; DE 75 1134; DE 101 Additional Facts ¶ 19).
In October 2009, months after the submission of the claims for the six exemplar transactions, members of Holdings’ compliance department discussed generally — that is, not directly concerning diabetic supplies — whether their AOBs may need to be “item specific.” (DE 199 Additional Facts ¶¶ 40-43). Relators identify this discussion as evidence supporting the legal conclusion that Defendants “had actual knowledge of the requirement that AOBs must be item-specific.” (DE 199 Additional Facts ¶40). However, Defendants correctly point out that the discussion was prompted by an educational webinar, which cited no authority for the item-specificity requirement, presented by Cigna in its capacity as a durable medical equipment Medicare Administrative Contractor (“MAC”).
(II) Discussion
(II)(A) Summary Judgment Standard
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The movant “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S.
After the movant has met its burden under Rule 56(c), the burden shifts to the nonmoving party who “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
In evaluating ,a motion for summary judgment, the Court considers the evidence in the record, “including depositions, documents, electronically stored information, affidavits or declarations, stipulations ..admissions, interrogatory answers, or other materials.... ” Fed. R. Civ. P. 56(c)(1)(A). The Court “must view all the evidence and all factual inferences reasonably drawn from the evidence in the light most-favorable to the nonmoving party, and must resolve all: reasonable doubts about the facts in favor of the non-mov-ant.” Rioux v. City of Atlanta,
The Court notes that the Parties are not in complete accord regarding the operative facts, but their disputes either do not pose genuine issues material to the resolution of the motion or are not actually factual in nature. An example of a disputed, but not material, factual issue is the business relationship between Defendants (Holdings and Lineare) and two entities not mentioned or named as parties in the SAC (Med4Home, Inc. and Reliant Pharmacy Services) and how these non-parties participated in the alleged scheme of false bill,ing. (See, e.g., DE 75 ¶ 4; DE 101 ¶ 4; DE 199 ¶4; DE 207 ¶4 (concerning phone numbers of Med4Home, Inc. and Reliant Pharmacy Services customers)).
First; allegations,!regarding non-parties Med4Home, Inc. and Reliant Pharmacy Services have nothing to do with the exemplars. (See generally SAC DE 43; DE 199 Additional Facts ¶¶13,15). Second, claims regarding the previously unidentified entities Med4Home, Inc. and Reliant Pharmacy Services were not pleaded with specificity in the SAC.. (See generally SAC DE 43). As discussed at the June 19, 2014 and March 19, 2015 status confer-. enees, the pleadings are closed and the Court does not find “extraordinary” grounds justifying the inclusion of addi
Similarly, the Court need not dwell on the legal disputes presented in the Parties’ statements of facts. An example of a nonfactual dispute in the statements of material facts is the Parties’ competing interpretation of what weight federal agencies place on tax identification numbers (“TIN” or “EIN”) in determining whether an entity is a separate “supplier” under the applicable regulations. (DE 75 ¶ 8; DE 101 ¶ 8; .DE 199 ¶ 8; DE 207-¶ 8). It is an undisputed -fact'that Diabetic Experts is a d/b/a of Lineare.- (DE 75-¶ 6; DE 101 ¶ 6). However, Relators dispute that Lineare and Diabetic Experts are the same supplier as that term is used in the federal regulations governing Medicare supplier eligibility and billing. Id. This is a legal— not Tactual — -issue. Accordingly, there is no genuine issue of material fact prevént-ing-the Court from deciding the motion for summary judgment on the six exemplars as a matter of law.
(II)(B) Expert, Opinion On Legal Conclusions
Before . turning to the merits, the Court addresses whether- Relators’ expert report is appropriately considered with the motion for summary judgment on the exemplars. Federal Rule-of Evidence-704 allows an expert to “testify as to his opinion on an ultimate issue of fact,” but an expert may not tell the judge or jury what result to reach under the law. Montgomery v. Aetna Cas. & Sur. Co.,
Therefore, Defendants’• motion to strike Waldhauser’s expert report (DE 104) is GRANTED IN PART. All opinions in the report regarding the legal standards and regulatory interpretation applicable to this case are stricken. Notwithstanding that determination, the Court agrees with the Parties that Waldhauser’s extensive background and experience may make him an appropriate expert witness, able to offer permissible and helpful opinions to the trier of fact. (DE 104 at 2 n. 1; DE 117 at 1, 3). Thus, for the purposes of the instant motion, the Court will - consider the nonlegal opinions expressed in Waldhauser’s report and grant them whatever weight they merit. And, while Waldhauser’s impermissible legal conclusions will not be considered by the Court, he may testify regarding other, permissible opinions in his final expert report should any issues remain following the resolution of the instant motion for summary judgment.
(IIXC) The False Claims Act
The False Claims Act “was enacted in 1863 with the principal goal of stopping the massive' frauds perpetrated by large private contractors during the Civil War.” Vt. Agency of Natural Res. v. Stevens,
(a)(1)(A) knowingly20 presents, or causes to be presented, a false or fraudulent claim21 for payment or approval; or
(a)(1)(B) knowingly makes, uses, or causes to be made or used, a false record or statement material22 to a false or fraudulent claim. ■
31 U.S.C. § 3729.
The False Claims Act does not deal with all non-compliance and “[t]he
False Claims Act liability should not be invoked lightly; it is “not a vehicle to police technical compliance with complex federal regulations.” United States ex rel. Hobbs v. MedQuest Assocs., Inc.,
In Count I, Relators argue that Diabetic-Experts knowingly submitted false claims for payment — a so-called presentment claim — because the claims arose out of calls with beneficiaries that violated the unsolicited telephone contact rules and because Diabetic Experts used AOBs that could only be used by Lineare. In Count II, Relators argue that Holdings knowingly provided Diabetic Experts with improper sales leads- generated from Holdings’ database of patient information and Diabetic Experts knowingly used those leads to make the unsolicited sales calls alleged in Count I; and Holdings knowingly provided the purportedly false AOBs to Dia
Thus, as to Count I, the Court must determine whether Diabetic Experts had the requisite scienter when it-called the six beneficiaries and used the Lineare AOBs to submit claims following those calls; and for Count II, whether Holdings and Diabetic Experts - had the requisite scienter when they shared the patient information database and allegedly used false AOBs. For the AOBs to have been “false,” either the six exemplar beneficiaries must not have had adequate notice that Diabetic Experts would submit their claim or the items provided must have been new pieces of equipment such that the regulations would preclude using the old AOBs.
(II)(C)(1) Factually False Claims Or Legally False Claims
In order to succeed on a presentment claim, a relator must prove three things: (1) a false or fraudulent claim (2) was presented, or caused to be presented, by the defendant to the United States for payment or approval (3) with knowledge that the claim was false. R & F Props.,
A factually false claim occurs, for example, when a supplier submits a claim that misidentifies the goods supplied or requests reimbursement for goods that it never provided. See Mikes,
Although Relators claim in their supplemental facts that Defendants’ phone calls to Medicare beneficiaries regarding diabetic supplies “resulted] in overutilization and frequent overbilling of Medicare,” this claim is not supported by the record. (DE 199 Additional Facts K.3). The citations
A legally false claim is actionable when the supplier has falsely certified compliance with the applicable statutes and regulations, but nevertheless has submitted a claim. Mastej,
(II)(C)(2) Liability For False Certification ■
Although only implied certification is at issue here, it is more easily understood in juxtaposition with express certification.. Express certification means that the supplier- has certified compliance with applicable laws and regulations as part of the claims submission process. Keeler,
There is no allegation in the SAC that Holdings or Diabetic Experts expressly certified compliance with supplier standards when submitting the six claims at issue.
Courts limit implied false certification claims to situations where compliance is the sine qua non of receipt of federal funding. Urquilla-Diaz,
Although the telephone contact statute and regulation are enforced in slightly different ways, the Court assumes for purposes of this discussion that certification of compliance with the supplier standards affects the government’s decision to pay claims and therefore does not undertake the Mikes analysis. (See Supplier Enrollment Application DE 75-2 at 34 (conditioning payment of claims upon the “the claim and the underlying transaction complying with [Medicare] laws, regulations, and program instructions ... and on the supplier’s compliance with all applicable conditions of participation in Medicare.”)).
Inasmuch as the Court assumes that the condition of payment or materiality element of the False Claims Act analysis is satisfied, the Court must determine whether the six exemplars are instances where Defendants submitted claims to the government, certified compliance, or made or used records with knowledge: 1) that Defendants were in violation of the unsolicited telephone contact proscription; or 2) that the AOBs did not meet Medicare requirements. Defendants argue that Rela-tors’ theory of liability rests on two faulty premises: 1) that Lineare and Diabetic Experts are two distinct legal suppliers for the purposes of providing DMEPOS supplies to beneficiaries and submitting claims for payment; and 2) that the diabetic testing supplies provided to the six exemplar beneficiaries are new pieces of “equipment.” The Court considers these arguments in turn.
(II)(C)(3) Diabetic Experts: Subpart or Separate Supplier?
The regulatory identity of the supplier is critical to the disposition of the instant motion. The Court starts from an uii-controverted fact sworn to by Holdings’ Director of Taxes: there is no separate Diabetic Experts of America company, affiliate, or entity (DE 75 ¶ 12; Crisp Aff., DE 75-1 IT 16); Diabetic Experts is a fictitious name used by Lineare (DE 75 ¶ 12).
The Court must determine whether, pursuant to the Medicare statutes and regulations, Diabetic Experts is a separate and independent supplier from Lineare. If Lineare and Diabetic Experts are the same supplier, then the telephone contacts with the six exemplar beneficiaries were not violations; Lineare sold each a covered item of DMEPOS in the fifteen months prior to the billing at issue. Likewise, if they are the same supplier, Diabetic Experts’ submission of a claim based on an AOB
(II)(C)(3)(a) Interpretation Of Medicare Statutes And Regulations
The Court starts with the statutory text and proceeds from the “under
“The first rule' in statutory construction is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute.” Shotz,
Statutes may lack sufficient clarity for practical application and “[executive actors often must interpret the.enactments Congress'has charged them-with enforcing and implementing.” Gonzales v. Oregon,
At least three levels of deference are relevant' to this discussion of the Medicare statutes and regulations. .Chevron deference applies to agency interpretations of ambiguous statutes; Auer deference applies to agency interpretations of the agency’s own ambiguous regulations; and Skid-more deference applies to less formal agency guidance documents and opinions. See Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc.,
Under Chevron, courts give agency interpretations of an ambiguous statute “controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute.” Chevron,
The Secretary of Health and Human Services is charged by Congress vrith administering the Medicare - statute. See Almy v. Sebelius,
As the Court explained in Chevron, “[t]he power of an administrative agency to administer a congressionally created ... program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly,. by Congress.” Chevron,
Nonetheless, judicial deference to CMS’ interpretation is not unlimited. It does not extend, for example, to an additional layer of analysis, such as when a Medicare contractor offers .a. non-binding interpretation of - Medicare compliance manuals. See Elgin Nursing & Rehab. Ctr. v. U.S. Dept. of Health & Human Servs.,
(II)(C)(3)(b) The Regulations Contemplate An Organization Like Lineare
In the final rule establishing the supplier standards for DMEPOS suppliers, CMS
In order to describe the relationship between the parent organizational health care providers and the separate physical locations at which durable medical equipment is actually dispensed to patients under the NPI regulations, CMS referred to the different components and physical locations as “subparts.” HIPAA Administrative Simplification: Standard Unique Health Identifier for Health Care Providers, 69 Fed.Reg. 3434-01, 3438 (Jan. 23, 2004) (to be codified at 45 C.F.R. Part 162). Furthermore, later interpretation from CMS is consistent with the understanding that DMEPOS suppliers like Lin-eare may be:
made up of components that ... have separate physical locations where health care is furnished. These components and physical, locations are not themselves legal entities, but are part of the organization health care provider (which is a legal entity). The NPI final Rule refers to components and locations as subparts.
(Centers for Medicare and Medicaid Services, Medicare Learning Network, The National Provider Identifier (NPI): What-You Need to Know (2012) DE 75-3 at 85). With regard to subparts, Medicare requires suppliers to obtain an NPI for any subpart “that would be a covered health care provider if it were a separate legal entity.” 45 C.F.R, § 162.410(a)(1); (DE 75 ¶ 14). ‘
(II)(C)(3)(c) Lineare, Inc. d/b/a Diabetic Experts Is Not A Separate Supplier
The allegations of non-compliance in the SAC depend on the premise that Diabetic Experts is not a subpart of Lineare, but is a separate supplier altogether. If that premise is incorrect, there is no cognizable violation stated against Holdings in Count If or against Diabetic Experts in Counts I or II for the telephone contacts and use of Lincare’s AOBs. After a thorough review of the record, the Court does not view the question of whether Lineare and Diabetic Experts are the same entity for the purposes of Medicare to be a question of disputed fact. It is undisputed that Diabetic Experts is a d/b/a of Lineare. (DE 75 ¶6; DE 101 ¶6). Thus, whether Lineare and Diabetic Experts are separate suppliers for purposes of False Claims Act liability turns on an analysis of the Medicare statutes, regulations, rules, and related commentary and regulatory history.
Defendants’ position that Diabetic Experts is not a separate legal-entity from Lineare is consistent with both the agency discussion in the final rule establishing the NPI and the agency interpretation of that rule. ' Relators have not presented the Court with any authority suggesting that Diabetic Experts is anything other than a subpart of Lineare. The administrative appeal decision cited by Relators stands for the unremarkable idea that all Medicare supplier locations must comply with the Medicare supplier standards. See PSI Premier Specialties, Inc. d/b/a Med. Express PSI, Dept. of Health and Human Servs. Depart. Appeals Board Decision No. CR2833 (June 18, 2013).
Lineare is a DMEPOS supplier that at one time sold oxygen supplies to the six exemplar beneficiaries. Diabetic- Experts is not a separate supplier, but is a d/b/a of Lineare that sells diabetic testing supplies; “[d]oing business as” means a company is using an assumed name, “it signals that the business may be licensed or incorporated under a different name.” Black’s Law Dictionary 454 (9th ed.2009); see also 8 Fletcher Cyclopedia of the Law of Private Corporations § 3831 (revised ed. 1992 & Supp.1999) (“[U]sing d/b/a or ‘doing business as’ to associate an assumed or fictitious name with a corporation does not, without more, create a separate legal entity different from the corporation.”); Snowden v. Checkpoint Check Cashing,
To support the allegation that Lineare and Diabetic. Experts submit claims to Medicare as separate suppliers enrolled in the Medicare program, the SAC and Rela-tors’ statements of fact identify various differences between certain business practices of Lineare and Diabetic Experts. (See SAC DE 43; DE 101; DE 199). Diabetic Experts sells a different type of product than Lineare. Diabetic Experts “operates independently from Lineare” and “sells and markets completely separate lines of products;” Lineare sells oxygen supplies while Diabetic Experts sells diabetic supplies. (DE 101 ¶¶ 12, 21). Lineare does not have other subparts that sell diabetic supplies: “[n]o Lineare, Inc. location, other than Diabetic Experts, however, provides diabetic testing equipment or supplies.” (DE 101 Additional Facts ¶ 8; DE 199 Additional Facts ¶ 10). Diabetic Experts filled out their claims forms with the name Diabetic Experts, Diabetic Experts’ unique identifying numbers (e.g., the Diabetic Experts NPI), and Diabetic Experts’ unique account number. (DE 101 ¶¶6, 12; DE 101 Additional Facts ¶¶ 9,11,16; DE 199 Additional Facts ¶¶ 6, 11,15,26),
However, Diabetic Experts supervisors took direction from and ultimately answered to Lineare regional managers. (SAC DE 43 ¶ 43). Furthermore, while it is undisputed that Lineare and Diabetic Experts maintain different account numbers for billing.beneficiaries and that payments from Medicare are routed to different bank accounts for Lineare and Diabetic Experts, (DE 101 Additional Facts ¶ 14; DE 199 Additional Facts 2; 26), the revenue from Diabetic Experts is all reported to the IRS under Lincare’s EIN. (DE 101 ¶ 12). Similarly, although the six exemplar claims were submitted pursuant to Diabetic Experts’ EDI transmission agreements, (DE 199 Additional Facts ¶¶ 15, 16), those EDI transmission agreements reveal that the entity identified as responsible for the claim is “Lineare, Inc., d/b/a Diabetic Experts of America.” (DE 195-7 at 4; DE 199 Additional Facts ¶ 16). Likewise, Diabetic Experts’ correspondence with the MACs confirms that Lin-eare does business as Diabetic Experts. (See, e.g., DE 195-8 at 2). Against this factual backdrop, the Court addresses the pertinent Medicare regulations and agency interpretation regarding DMEPOS suppliers.
First, along with the NPI and NSC number, the EIN is the “basic identification number that [CMS] use[s] to distinguish between suppliers.” Medicare Program; Additional Supplier Standards, 65 Fed.Reg. 60366-01, 60367 (Oct. 11, 2000) (to be codified at 42 C.F.R. Part 424). CMS expressly permits a DMEPOS supplier to enroll multiple “practice locations” using a single tax identification number. See Medicare Program; Establishing Additional Medicare' Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Supplier Enrollment Safeguards, 75 Fed.Reg. 52629-01, 52632 (Aug. 27, 2010) (to be codified at 42 C.F.R. Part 424). But this carries a serious risk for a large supplier organization: “If the DME-POS .supplier makes the business decision
Second, simply having a unique NPI does not make Diabetic Experts a separate DMEPOS supplier. This is because, “[t]he health care provider numbers sometimes represent the actual health care provider that furnishes health care, but may also represent the health care provider’s service locations, corporate headquarters, specialties, pay-to arrangements, or contracts.” HIPAA Administrative Simplification: Standard Unique Health Identifier for Health Care Providers, 69 Fed.Reg. 3434-01, 3436-37 (Jan. 23, 2004) (to be codified at 45 C.F.R. Part 162). As discussed above, NPPES may assign an NPI “to a subpart of a health care provider,” on request “if the identifying data for the subpart are unique.” 45 C.F.R. § 162.408(a)(1); § 162.408(g). Lineare did precisely this for Diabetic Experts and was given an NPI by NPPES, (DE 75 ¶ 15). The regulations required Diabetic Experts to obtain an NPI in order to bill Medicare for DMEPOS provided to beneficiaries. See 45 C.F.R. § 162.410. Lacking an NPI is proof that a location cannot properly bill Medicare, but having an NPI does not prove that' an entity is a separate supplier for the purposes of billing Medicare. The fact of an NPI shows that an entity can bill Medicare, but it does not explain why that entity can do so. And the same is true for obtaining NSC numbers. See 42 C.F.R. § 424.57 (providing that a subpart with unique identifying data could also apply for an NSC number if it met the requirements for DMEPOS suppliers generally). A subpart seeking an NSC number is subjected to review, after which NSC notifies the subpart regarding its enrollment decision and assigns an NSC number to it.
Moreover, CMS’ responses to comments on the NPI rule support the conclusion that Diabetic Experts is a subpart of Lin-eare, and not a separate supplier. CMS recognized that Congress intended to accommodate health care providers that “operate at. multiple locations and/or provide multiple types of health care services, and intended that the identifier standard take these, variations in circumstance into account. We accommodate this language by requiring covered health care providers to obtain NPIs for subparts of their organizations.” HIPAA Administrative Simplification: Standard Unique Health Identifier for Health Care Providers, 69 Fed.Reg. 3434-01, 3438 (Jan. 23, 20.04) (to be codified at 45 C.F.R. Part 162). CMS stated in no uncertain terms, “[t]he subparts are simply parts of the legal entity. The legal entity — the covered entity — is -ultimately responsible.” Id. at 3439.- When the regulations were crafted, CMS considered the creation of sub-IDs under each NPI such that the healthcare provider “might use the sub-IDs for different physical locations [or] subparts.” Id. at 3440. Ultimately, it decided not to-create a sub-ID system and instead allowed subparts to obtain an NPI. Id. Lineare organized this segment of its business consistently with the 2004 agency interpretation. Lineare has “over 800 sub-part locations operating throughout the United-States, each with its own unique NPI number.” (Murphy Aff. DE 195-6 ¶ 9).
Finally, the supplier standards, state statutes, and federal regulations mandate enrollment or registration of different physical locations. See 42 C.F.R. § 424.57(b)(c). Diabetic Experts operates in Missouri and had Lineare failed to register its d/b/a, it would have run afoul of the standards requiring enrollment of each separate physical location and requiring the supplier to operate its business in compliance with applicable state licensure and
Therefore, a unique name, NPI, or-NSC number for Diabetic Experts does not mean that Diabetic Experts is a separate supplier, but Is consistent with Defendants’ business' decision to enroll Diabetic Experts as a subpart of Lineare. The fact that Diabetic Experts operates in a different location than Lineare does not undercut the notion that Diabetic Experts is a subpart; it is one of the reasons Diabetic Experts was required to obtain its own NPI and NSC numbers. See 42 C.F.R. § 424.57(b) (providing that the parent supplier must enroll each “separate physical location it uses to furnish Medicare-covered DMEPOS.”). The Subpart Paper explicitly set forth CMS’ position regarding unique Medicare numbers for subparts: “Medicare regulations require that each practice location-of-a . supplier of DMEPOS (if it has more than one) must, by law, be separately enrolled in Medicare and have its own unique Medicare identification number.” - Subpart Paper at 8. The new Missouri location was a subpart of the existing supplier and the Medicare 855S supplier enrollment form, without which Diabetic Experts could not apply to be eligible to bill Medicare, bears the name “Lineare, Inc., d/b/a Diabetic Experts of America.” (DE 195-6 at 20).
Relators argue that “it is clear that the companies [
(II)(C)(3)(d) The Telephone Contacts Do Not Support FCA Liability
It is undisputed that Lineare sold an item of DMEPOS to the exemplar beneficiaries within the fifteen months leading up to the phone calls in question. (DE 75 ¶ 20; DE 100 at 6). This situation fits the exception contained in the unsolicited telephone contact statute. Title 42 U.S.C. § 1395m(a)(17)(A)(iii) expressly provides that a supplier may make telephone contact with a beneficiary “regarding the furnishing of a covered item other than a covered item already furnished to the individual, [if] the supplier has furnished at least 1 covered item to the individual during the 15-month period preceding the
Nevertheless, Relators direct the Court to guidance from CMS that they argue clearly supports their view on the telephone contact issue. The guidance they rely upon is inapposite for three reasons. First, CMS published the guidance in response to frequently asked questions concerning the revised standards for DMEPOS suppliers. (DE 100-7 at 17-19). This FAQ went into effect on September 27, 2010.
(II)(C)(3)(e) Diabetic Experts’ AOB Use Does Not Support FCA Liability
The AOBs used by Diabetic Experts were originally given to Lineare. (DE 75 ¶¶ 33-37). Maintaining those signed statements on file allowed Lineare to submit claims for payment to the government. The AOBs were effective indefinitely and there is no evidence that the exemplar beneficiaries withdrew their consent before Medicare was billed by Diabetic Experts for the DMEPOS provided. See 42 C.F.R. § 424.40(d). For the reasons discussed above, Lineare and Diabetic Experts are one supplier for the purposes of Medicare
It should be noted that the AOBs signed by the exemplar beneficiaries were not identical. (See DE 75-2 at 73, 78, 83, 88, 93, and 98). Some of the AOBs refer to Lineare and others refer to “supplier and its affiliates.” (Id. at 78, 88). Nevertheless, all six of the exemplar beneficiaries’ AOBs contain clear language providing for services to be rendered by “Lineare” or “Supplier.”. (DE 75 ¶¶ 33-34; .DE -101 ¶¶ 33-34 (“Undisputed as to the content of the forms executed by the six beneficiaries”)). Inasmuch as Lineare and Diabetic Experts are the same supplier, there was adequate notice of this use of the Lineare AOBs by Diabetic Experts and there was no per se violation simply because the name Diabetic Experts did not appear on them. See 42 C.F.R. § 424.36(a) (providing that a supplier,may maintain the customer’s signature on file using a form “that contains adequate notice to the beneficiary ... that the purpose of the signature is to 'authorize a provider or supplier to submit a claim to Medicare.”). In addition, Holdings did not make or use a false ■record by allowing Diabetic Experts to access or use the AOBs.
(II)(C)(4) Regulations Do Not Require New Assignments For These Supplies
Relators argue that even if Diabetic Experts were permitted to use the Lineare AOBs, those AOBs could not be used for the exemplar beneficiaries’ diabetic testing supplies. Although an AOB may be effective and maintained on file indefinitely, a new AOB is required for a new piece of “equipment.” 42 C.F.R. § 424.40(d)(2) (providing that “a new statement is required if another item of equipment is rented or purchased.”). Relators argue that Defendants’ construction of the new AOB requirement is impermissibly narrow and, in the alternative, that the testing strips, lancets, disposable lancet devices, and testing solution provided to the exemplar beneficiaries were new equipment that would require a new AOB. Defendants rejoin that the diabetes testing supplies were not new pieces of equipment; because they were not “equipment” at all.
The dispute between Relators and Defendants concerning the supplies and equipment distinction is best understood through a Chevron framework. In the two-step Chevron analysis, a court first determines whether Congress has spoken to the precise question at issue. Chevron,
“[Although the statute includes a nonexclusive statutory list, of representative medical equipment,” it does not specifically define the term DME. Currier v. Leavitt,
If “Congress has not directly addressed the matter or the statute is ambiguous with respect to the matter, [courts] move to Chevron’s second step.” Alas-Murcia,
When construing a regulation, the Court looks to the “regulation’s plain language.” Thomas Jefferson Univ.,
We are now taking this opportunity to propose criteria defining home health supplies, equipment, and appliances, to better align with the . Medicare program’s definition of durable medical equipment found at § 414.202. We propose that supplies are defined as “health care related items that are consumable or disposable, or cannot withstand repeated use by more than one individual.” - We propose that medical equipment arid appliances are “items that are primarily and customarily used to serve a medical purpose, generally not useful to an individual in the absence of an illne'ss or injury, can withstand repeated use, and can be reusable or removable.”
Medicaid Program; Face-to-Face Requirements for Home Health Services; Policy Changes and Clarifications Related to Horiie Health, 76 Fed.Reg. 41032-01, 41034 (July 12, 2011) (proposed rule clarifying 42 C.F.R. Part 440) (emphasis added); Wis. Dept. of Health & Family Servs. v. Blumer,
It is beyond peradventure that the testing strips, lancets, disposable lancet devices, and testing solution cannot withstand repeated use. Therefore, they are not pieces of equipment. Rather, they are the supplies necessary for the effective use of- a blood glucose, home testing rnonitor. As .a result, the AOBs used in the six exemplar transactions continued to be effective because Defendants did not send
(II)(C)(5) The Six Exemplars Do Not Demonstrate Scienter
Scienter is a necessary element of a claim under both 31 U.S.C. § 3729(a)(1)(A) and (B). See also Urquilla-Diaz,
The Eleventh Circuit recently discussed the False Claims Act’s “nuanced” scienter requirement in considerable depth and detail. The decision in Urquilla-Diaz cogently explains why the Court cannot find Defendants liable for the claims submitted and records made in connection with the six exemplars:
For liability to attach, the relator must show that the defendant .acted “knowingly,” which the Act defines as either “actual knowledge,” “deliberate ignorance,” or “reckless disregard.” § 3729(b). Although proof of a “specific intent to defraud” is not required, id. the statute’s language makes plain that liability does not attach to innocent mistakes or simple negligénce, [United States v. King-Vassel, 728 F.3d 707, 712 (7th Cir.2013)].
Congress added the “reckless disregard” provision to the False Claims Act in 1986. United States ex rel. Williams v. Renal Care Grp., Inc.,696 F.3d 518 , 530 (6th Cir.2012). The Senate Report accompanying this change states that this language was added to ensure that “knowingly” captured “the ‘ostrich’ type situation where an individual has ‘buried his head in the sand’ and failed to make simple inquiries which would alert him that false claims are being. submitted.” S. Rep. 99-345,- at 21,- reprinted in 1986 U.S.C.C.A.N.'5266, 5286. Liability attaches to “[o]nly those who act in gross negligence” — those who fail “to make such inquiry as would be reasonable and prudent to’ conduct under the circumstances.” Id. at 20 (quotation marks omitted). In other words, Congress did not intend to turn the False Claims Act, a law designed to punish’ and deter fraud, see Ragsdale v. Rubbermaid, Inc.,193 F.3d 1235 , 1237 n. 1 (11th Cir.1999), “into a vehicle either ‘punish[ing] honest mistakes- or incorrect claims submitted through mere negligence.” or imposing ‘a burdensome obligation’ on government contractors____” United States v. Sci. Applications Int’l Corp.,626 F.3d 1257 , 1274 (D.C.Cir.2010) (quoting S. Rep. 99-345, at 6,19).
Urquilla-Diaz,
The Eleventh Circuit further observed that deliberate ignorance requires “even more culpability” than that needed to constitute reckless disregard. Urquilla-Diaz,
Relators’. best evidence, regarding Diabetic Experts’ knowledge that their course of conduct might result in false claims concerns only the AOBs and not compliance with the unsolicited telephone contact proscription. Relators point to a March 2009 email where an employee expressed concern that Diabetic Experts had received AOBs from other “Lineare centers” that do not “meet guidelines.” (DE 102-5 at 2). But' this exchange focused on deficiencies in the AOBs having nothing to do with Diabetic Experts practice of using “AOBs from other Lineare centers in order to ship/bill the diabetic supplies.”
Relators also make much of an October 2009 email between Defendants’ employees regarding whether new AOBs were required for new pieces of diabetic testing “equipment.” (DE 114 at 4-5). In that October 2009 email, Lineare personnel discussed the issue of AOBs, recognizing that they “[m]ay need to reconsider [their] process for Patient Agreements.” (DE 114 at 4). Here, the last exemplar transaction at issue was initiated in May 2009. Relators do not explain how an October email would allow a reasonable jury to conclude that Diabetic Experts knowingly submitted false claims in May of the same year based on existing AOBs. Urquilla-Diaz,
Contrary to Relators’ assertions that Defendants disregarded AOB regulations, the March and October 2009 email conversations indicate that Defendants were monitoring their AOBs with an eye toward compliance and culling out invalid AOBs. (DE 102-5 at 2). Even if in hindsight, the claims were proved to be objectively false, the record demonstrates that Defendants could have had a reasonable, non-reckless belief that: 1) Diabetic Experts could contact Lineare customers; 2) Diabetic Experts could submit claims to Medicare based on AOBs given to Lin-eare; 3) Diabetic Experts could submit claims for testing strips, lancets, disposable lancet devices, and testing solution based on broadly written AOBs for the provision of “HME and supplies” or “DME”; 4) Diabetic Experts could access the same information from Holdings as could Lineare; and 5) Holdings could provide' the patient information and AOBs to Diabetic Experts. See United States ex rel. Hixson v. Health Mgmt. Sys., Inc.,
Summary judgment in favor of a False Claims Act defendant is appropriate where the relator has “not raised a genuine issue of material fact regarding scienter.” Urquilla-Diaz,
Simply put, to survive summary judgment on the exemplars, Relators must cite record evidence “from which a reasonable jury could conclude that [defendant] knowingly and falsely certified its compliance” or knowingly made or used a false record. Boeing,
(II)(C)(6) The Six Exemplars Do Not Demonstrate Falsity
There is a line of authority suggesting that disputes.as to the interpretation of regulations do not implicate False Claims Act liability. See, e.g,, Hagood v. Sonoma County Water Agency,
The gravamen of a False Claims Act claim is the submission of a false claim. Urquilla-Diaz,
(II)(D) Remaining Claims
The Parties have indicated that the Court’s resolution of the motion for summary judgment regarding Relators’ six exemplars is not case dispositive. The discovery disputes presided over by Magistrate Judge Simonton and the briefing related to this motion for partial summary judgment demonstrate that Relators believe claims might lie regarding Med4Home, Inc., Reliant Pharmacy Services, or other entities related to Defendants. Accordingly, the Parties shall submit a joint status report to the Court regarding what issues, if any, remain. However, it should be noted that, the SAC is the operative pleading. Under this Circuit’s stringent False Claims Act pleading standard, entities not named in the SAC and any alleged claims against them are not a part of this case. Keeler,
(III) Conclusion
' For the reasons discussed above, it is ORDERED AND ADJUDGED as follows:
1. The motion for partial summary judgment (DE 74) is GRANTED.
2. The motion to strike expert report (DE 104) from Relators’ filings is GRANTED IN PART.
3. By 5:00 p.m. on July 22, 2015, the Parties shall file a joint status réport indicating what claims, if any, remain and how they propose to proceed.
DONE and ORDERED
Notes
. Throughout this opinion, the Court refers to Lineare and Diabetic Experts separately in order to address arguments made by Relators that are premised on the distinction between them.
. In addition to supplementing three of their existing responses to Defendants’ statement of material facts, which was contemplated by the Court in granting Relators’ 56(d) motion, Relators also provided the Court with 49 "Additional Undisputed Material Facts." (DE 199 Additional Facts ¶¶ 1-49). Accordingly, the Court distinguishes between citations to the responsive paragraphs and the additional facts.
.The Court has allowed the Parties in this case to submit multiple motions for summary judgment. (See, e.g., DE 217). The Court will not consider the briefing on those motions in deciding the fully briefed motion as to the six exemplars.
. Congress amended the False Claims Act (the "Act” or "FCA”) in May of 2009 with the Fraud Enforcement and Recovery Act ("FERA”), Pub.L. No. 111-21, 123 Stat. 1617 (2009). Relators properly cite the False Claims Act as amended because, as the Eleventh Circuit held in Hopper v. Solvay Pharm., Inc.,
. Until 2001, CMS was known as the Health Care Financing Administration. See CMS; State of Organization, Functions and Delegations of Authority; Reorganization Order, 66 Fed.Reg. 35437-03 (July 5, 2001). For ease of reference, the Court refers only to CMS.
. Medical equipment used in the home is sometimes referred to as Home Medical Equipment ("HME”). (See, e.g., DE 75 ¶ 34).
. 42 C.F.R. § 424.57(a) and (c).
. The National Supplier Clearinghouse was the contractor responsible for the enrollment and re-enrollment process for DMEPOS suppliers. 42 C.F.R.- § 424.57(a) (2009). The regulation was amended in 2014 to change the terminology to reflect the possibility that different Centers for Medicare Services contractors other than NSC may handle the enrollment of DMEPOS suppliers and ensure that those DMEPOS suppliers are meeting supplier standards. That 2014 amendment removed the term “National Supplier Clearinghouse (NSC)” from the definitions in § 424.57(a). See Medicare Program; Surety Bond Requirement for Süppliérs of Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS); Technical Amendment, 79 Fed.Reg. 69772-01 at 69773 (Nov. 24, 2014) (to be codified at 42 C.F.R. Part 424). Likewise, the NSC numbers have been succeeded by Provider Transaction Access Number ("PTAN”). Nevertheless, for simplicity, the Court refers to the NSC and NSC numbers throughout this opinion.
. The NPI is a 10-position numeric identifier that is the standard unique health identifier for health care providers. 45 C.F.R. § 162.406. The NPI system was meant to, and in large part has, replaced a-variety of other identifiers used by states or the federal government to identify service providers. Nevertheless, those identifiers in use prior to HI-PAA’s requirement, that suppliers obtain an NPI often remain in use. Those pre-NPI identifiers are sometimes referred to as “legacy provider identifiers.” See Centers For Medicare And Medicaid Services, FAQ 6115, https:// questions.cms.gov/faq.php?id=5005 &faqld=6115 (last visited Mar. 11, 2015)., see also DE 75-3 at 83, Centers for Medicare and Medicaid Services, Medicare Learning Network, The National Provider Identifier (NPI); What You Need to Know (2012) (“The NPI must be used in place of legacy provider identifiers such as... National Supplier Clearinghouse (NSC)” numbers.); (see also CMS Medicare Program Integrity Manual Ch. 15 § 15.1.1 DE 195-4). ’ '
.The NPPES was formerly known as the National Provider System ("NPS”). See http://www.cms.gov/Regulations-and-Guidance/HIPAA-Administrative Simplification/NationalProvldentStand/ ■ downloads/npi_fs_geninfo_010906.pdf (last visited Mar, 11, 2015).- For ease of reference, the Court refers only to'NPPES.
. See Centers for Medicare and Medicaid Services, Educational Resources, https://www.cms, gov/Regulations-and-Guidance/HIPAA-AdministrativeSimplification/National ProvldentStand/Downloads/npi_dme_comm. pdf (last visited June 15, 2015).
. See Centers for Medicare and Medicaid Services, Medicare NPI Implementation, https:// www.cms.gov/Regulations-and-Guidance/ HIPAA-AdministrativeSimplification/National ProvIdentStand/Downloads/Medsubparts 01252006.pdf (last visited June 15, 2015).
. Relators worked for Lineare from October 2008 until November 2009 (SAC DE 43 ¶¶ 9, 13, 16, and 20) and the exemplar violations took place between December 2008 and September 20.09 (SAC DE 43 ¶¶ 128, 134). Rela-tors' allege that violations are ongoing, but that allegation is not relevant to the instant motion for summary judgment.
. Relators did not actually make all six of the exemplar sales. As alleged in the SAC, Megan Wheat made the sale to billing account' #033-380-018-996, Gene Wilson made the sale to billing account # 033-380-026-686, and Ken Knisley made the sale to billing account #033-380-027-35,4. (SAC DE 43 ¶¶ 131, 142, 146), , .
. In the supplemental briefing, the Parties disagree about how the six exemplar benefi-ciarles were identified as potential sales targets and what role; Holdings played in managing the exemplars' billing and biographical data. But the Parties do agree that the exemplars were Lineare customers and that Diabetic Experts handled the exemplar transactions. (DE 199 ¶ 4; DE 207 ¶ 4).
. NSC's later onsite inspection corroborates Diabetic Experts' position that it does not bill for glucose monitors, but rather provides them to beneficiaries at no charge. (Mar. 22, 2012 NSC onsite inspection of Diabetic Experts DE 100-5 at 24-25).
. As with nearly all of the allegedly factual disputes relevant to the determination of the instant motion, the Parties disagree about the legal conclusions to be drawn from the facts, but do not dispute the underlying facts. Here, the content of the AOBs signed by the exemplar beneficiaries is undisputed. Likewise, although not germane to the analysis of the pertinent exception to the unsolicited telephone contact proscription, Defendants do not rebut Relators’ factual proffer that at least some of the AOBs previously signed by the beneficiaries when they received their oxygen supplies did not contain any language relating to general consent to contact. (DE 199 Additional Facts ¶ 14).
. CMS enters into agreements with "DME MACs” to administer Medicare Part B. See 42 U.S.C. § 1395u(a).
. See, e.g., "It is my opinion that [Diabetic Experts] has violated Supplier Standard No. 11, and, therefore, has submitted false claims for payment to Medicare.” (DE 100-8 at 6).
. "Knowingly” means a person who (1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or- (3) acts in reckless disregard of the truth or falsity of the information; and no proof of specific intent to defraud is required. 31 U.S.C. § 3729(b).
. “Claim” means "any request or demand, whether under a contract or otherwise, for money or property that is presented to an officer, employee,, or agent of the United States; or is made to a contractor, grantee, or other recipient, if the money or property is to be' spent or used on the Government’s behalf or to advance a Government program or interest, and if the United States Government provides or has provided any portion of the money or property requested or demanded.” 31 U.S.C. § 3729(b).
.“Material” means "having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” 31 U.S.C. § 3729(b).
. Other circuits recognizing the theory of implied false certification (discussed below) note that it should not be applied to the entire universe of possible Medicare violations. As the Third Circuit observed in Wilkins, “the implied certification theory of liability should not be applied expansively, particularly when advanced on the basis of FCA allegations arising from the Government's payment of claims under federally funded health care programs.” Wilkins,
. The Eleventh Circuit in Urquilla-Diaz did not consider whether these elements might be different in post-FERÁ cases concerning make-or-use cláims pending on" or after June 7, 2008. As referenced, supra note 4, FERA created an explicit materiality element of § 3729(a)(1)(B). Because the Court resolves this motion without deciding the question of materiality, the Court- applies these elements to the six exemplars, notwithstanding the fact .that the claims arise under the post-FERA False Claims Act.
. The citations were not accompanied by pincites or parenthetical explanation. Reese v. Herbert,
. The only reference to certificatioh in the SAC is that the application for billing privileges required compliance with supplier standards. (See SAC. DE 43 ¶ 82)*, 42 C.F.R. § 424.57(c) ("Application certification standards. The supplier must meet and must certify in its application for billing privileges that' it meets and will continue to meet the following standards.”).
. Another court of this- district has noted that such certifications highlight the problem inherent in the condition of payment analysis. If compliance with all laws and regulations is a condition of participation in the program and the supplier-to-be certifies its understanding at the outset that compliance is a condition of payment, then compliance with all the laws and regulations of the Medicare universe is both a condition of participation and of
. The Court discusses whether the diabetic testing supplies provided to the exemplar beneficiaries were supplies or equipment in the context of the AOBs, below.
. In this discussion as all others, the Court’s determination bears only on liability under the False Claims Act. The Court expresses no opinion regarding whether administrative or any other type of action is warranted or appropriate regarding any of Lincare’s practices.
. The rule was promulgated by the Health Care Financing Administration, the predecessor to CMS.
. The Court emphasizes that the only companies it is concerned with in this case are the named Defendants: Lineare Holdings, Inc. and Lineare, Inc. d/b/a Diabetic Experts of America.
. Defendants assert that the guidance was not in fact issued by the DME MAC until January 14, 2011. (DE 100-7 at 13). The difference is of no moment because the last exemplar transaction took place before either date.
. An affiliate is a person or organization that is related to another person or organization through a compensation arrangement or ownership. 42 C.F.R. § 424.57(a).
. This does not mean, however, that there is no risk to Defendants for the purported violations. The Secretary of Health and Human Services could always initiate proceedings to strip Lineare of its eligibility to participate in Medicare if the Secretary thought Lincare’s interpretation of the Medicare statutes and regulations warranted sanction. See 42 U.S.C. § 1395m(a)(17)(C); 42 C.F.R. § 424.57(e); Hobbs,