United States: FCA Defendant Secures Post-Trial Directed Verdict In Implied False Certification Case

In United States of America ex rel. Ortolano v. Amin Radiology, a Florida federal court recently vacated a jury's verdict for a Relator, providing another example of the critical importance of the distinction between a "condition of participation" and a "condition of payment" when assessing a False Claims Act (FCA) suit involving an implied false certification theory.

Following a five day trial in May 2014, civil FCA defendant Amin Radiology (Amin) was hit with a $1.47 million jury verdict, with the jury finding that the practice had submitted 426 false claims to the government for PET/CT scans. The Relator was a former employee who filed suit in 2010 under both the federal and Florida False Claims Acts. The case hinged on evidence that Amin billed to the government scans that had been performed by general radiographers, rather than nuclear radiological technologists. In 2011, the federal government chose not to intervene in the case. Supported by uncontroverted testimony from a Florida state employee, Relator successfully argued at trial that, as a matter of Florida law, only licensed and certified nuclear medicine technologists were authorized to conduct PET/CT scans.

Nevertheless, upon consideration of Amin's post-trial Rule 50(b) motion for judgment as a matter of law, the Middle District of Florida vacated the jury's verdict on January 28, 2015, and directed judgment for Amin. The Court's ruling turned on the absence of any direct fraud evidence (i.e., evidence to show that services billed to the government were not provided or were medically unnecessary) and the critical distinction between conditions of participation and conditions of payment in government health care programs. The absence of any evidence to show a violation of a condition of payment ultimately proved fatal for the Relator's case. These arguments proved successful even though they had never been raised by Amin's attorneys until after trial began.

The Court first rejected the Relator's argument of direct fraud, finding that there was no legal support for the assertion that Medicare requires PET/CT scans to be performed in toto by nuclear medicine technologists. Regardless of Florida law, the Court was persuaded that Medicare has no such requirement for physician practice groups such as Amin Radiology, and that therefore there was no per se false claim under the FCA.

Turning to the Relator's express and implied false certification theories, the Court quickly disposed of the express false certification theory, finding a "conspicuous – and fatal – lack of evidence establishing that Amin ever made any written, express certification to Medicare, Medicaid or Tricare that its PET/CT scans were performed in compliance with Florida licensing requirements." This left the Relator's FCA action with only an implied false certification theory, which required establishing that Amin's violation of the Florida licensing requirement was a violation of a condition of payment (i.e., that the paying government agency would not have paid for the PET/CT scans had it known of Amin's lack of compliance with that particular state law).

Relator relied fully on two authorities to support his implied false certification theory: an excerpt of Chapter 13 of the Medicare Program Integrity Manual ('Reasonable and Necessary Provisions in LCDs'), and a Florida statute governing Medicaid Provider Agreements (Fla. Stat. § 409.907). The Court found the cited section of the Medicare Program Integrity Manual inapplicable to Amin Radiology or to the procedures at issue. As to the Florida statute, the Court was persuaded by legal authorities cited by Amin, which hold that compliance with state laws is, at most, a condition of participation. As the Court noted, "violations of a condition of participation do not form the basis of an FCA claim," and the ultimate sanction of such violations is removal from the government program.

With those two authorities eliminated, the Court found there to be a "complete absence" of any authority to suggest that compliance with Florida's licensing laws is a condition of payment under Medicare, Medicaid or Tricare. Therefore, Relator was found to have failed to present evidence sufficient to support his FCA claim and the Court directed judgment for Amin.

It remains to be seen if this ruling will be appealed to the Eleventh Circuit.

FCA Defendant Secures Post-Trial Directed Verdict in Implied False Certification Case

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