ACR members confront medical necessity daily. Should a patient undergo a diagnostic study, interventional or breast imaging procedure or radiation therapy? Some federal courts recently have ruled that physicians may be accountable legally for providing unneeded patient care — and falsely claiming such care was needed. These cases appear to have unusual facts that make them distinguishable. Yet they signal that judges may agree with prosecutors in looking behind your medical judgments. The following article sheds light on the situation and is reprinted with our colleagues’ permission.
In two separate instances this summer, federal appellate courts held that a doctor’s medical judgment can be “false.” In June, the Sixth Circuit reversed a judgment that had acquitted a cardiologist charged with criminal healthcare fraud stemming from his interpretations of angiograms. Then in July, the Tenth Circuit ruled medical judgment can be false for purposes of the False Claims Act (FCA), 31 U.S.C. §§ 3729–3733. In United States ex rel. Polukoff v. St. Mark’s Hospital, the court reversed a district court’s order dismissing an FCA qui tam action (i.e., a lawsuit that a whistleblower brings), rejecting the district court’s holding that medical judgment cannot be false under the FCA.
The relator, Dr. Gerald Polukoff, a doctor who worked with defendant Dr. Sherman Sorensen, alleges Dr. Sorensen received unlawful payments from Medicare by performing unnecessary heart surgeries and falsely certifying the surgeries were medically necessary. He filed suit against Sorensen and several institutions where Sorenson practiced. The government declined to intervene. The district court ultimately granted defendants’ motions to dismiss, holding that medical opinions cannot be proved objectively false as required under the FCA. The Tenth Circuit reversed and remanded.
The court reasoned that medical judgments can be “false” for at least three reasons.
First, it emphasized courts must broadly construe the FCA to reach all types of fraud. Second, the court said just because the allegedly false statement is stated as an opinion does not necessarily mean it is incapable of being false. And third, the court cited precedent for the principle that medically unnecessary medical procedures can form the basis of FCA actions. As a result, the court held that a doctor’s certification that a procedure was medically necessary is “false” under the FCA if the procedure was not “reasonable and necessary” as defined by the Medicare Program Integrity Manual. Though the court acknowledged its holding could expose more doctors to FCA liability, it pointed to the Supreme Court’s statement in United Health Services, Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016), that the related elements of materiality and scienter should prevent abuse of the statute.
This holding echoes an opinion from the Sixth Circuit two weeks earlier that a doctor’s determination of the degree to which a blood vessel has narrowed, as interpreted from an angiograph, “is a fact capable of proof or disproof,” and “it is up to the jury… to decide whether the government’s proof is worthy of belief.” In holding that “opinions are not, and have never been, completely insulated from scrutiny,” the Sixth Circuit appeared to be opening the door to scrutinizing whether a particular medical judgment was “false or fraudulent.”
The government immediately attempted to capitalize on the Sixth Circuit’s ruling. The day after Paulus came down, it hailed the decision as a “reject[ion]” of the proposition that conflicting expert testimony on the issue of medical necessity insulates a defendant from FCA liability for “false” medical judgments. The government has also immediately put Polukoff to use, citing it in another case and arguing that the Tenth Circuit’s approach reflects a “proper understanding of falsity” that should allow the government and relators to avoid dispositive pretrial rulings in medical-judgment cases under the FCA.
Though Paulus and Polukoff broaden the scope of potential liability in medical-judgment cases, they do not mean every medical-judgment case will survive beyond a motion to dismiss or summary judgment. Even the Sixth Circuit recognized that “the government might have a hard time proving that [the defendant] saw one thing but willfully recorded another.” And as the Tenth Circuit noted, some medical-judgment cases will fail to meet Escobar’s stringent materiality and scienter requirements. Indeed, as the Supreme Court did in Escobar, both decisions suggest that the battleground will shift to an individualized assessment of scienter.
Finally, it is unclear whether other circuits or the Supreme Court will follow Paulus and allow cases to proceed to a jury trial on the basis of disputed expert testimony. Polukoff does not expressly endorse Paulus, and the Tenth Circuit relied on Escobar’s “rigorous” materiality and scienter requirements as a safeguard against openended FCA liability. Moreover, the Eleventh Circuit has yet to decide United States v. GGNSC Admin. Servs. (commonly known as “AseraCare”). As the government’s repeated filings in the Eleventh Circuit demonstrate, the long awaited decision in AseraCare will offer another important take on the question of whether, and if so when, disputed medical judgments can give rise to FCA liability. Future dispositive motions can therefore point to the fact that Paulus has not been adopted by other appellate courts and that a government’s mere submission of a disputed expert opinion does not warrant a jury trial in light of the FCA’s rigorous scienter standard.