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Student I.D. Number: 5200893
Dated: February 08, 2022
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
UNITED STATES OF AMERICA )
ex rel. Grace A. Garrett, )
)
) Civil Action No. 21-2345-DMO )
Plaintiff-Relator. )
)
v. )
)
TWIN OAKS HOSPITAL, INC., ) FILED UNDER SEAL
) PURSUANT TO 31 U.S.C. § 3730(b)(2)
)
Defendants. )
MEMORANDUM OF LAW IN OPPOSITION TO
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
INTRODUCTION
In October 2020, Twin Oaks Hospital (Defendant) hired Grace A Garrett (Relator) as a highly qualified Medical Records Specialist responsible for submitting patient treatment claims to Medicare for reimbursement. Ironically, Twin Oaks Hospital is the defendant in this False Claims Act (FCA) claim due to the Relator’s keen attention to detail while an employee on hospital staff. As a good steward of taxpayer dollars, Relator uncovered and reported that Defendant knowingly and fraudulently enriched itself by submitting fifteen erroneous healthcare claims to Medicare for a windfall reimbursement. In addition, Relator provided objective evidence that Defendant engaged in a fraudulent practice, known as “upcoding,” which is billing Medicare for a higher level of service than was provided to the patient. The Defendants’ “upcoding” practice yielded them $30,000 per claim. Meaning that the fifteen “upcoded” medical reimbursement claims submitted by Defendant represent a combined total of $450,000. Like making a false 9-1-1 emergency call, Defendant’s windfall profits deprived other patients who depend on government healthcare insurance to offset the high cost of medical treatment.
Through their own volition, the Defendant knowingly and fraudulently misled Medicare insurance providers into making payments for medical services that were not rendered to patients, which is a clear violation of the FCA. The Relator is the original source of the information on which this qui tam suit is based and brings this claim on behalf of the government and taxpayers as a whistleblower empowered to do so by the FCA. The facts demonstrate a genuine dispute of material facts, and summary judgment should be denied.
STATEMENT OF FACTS
Twin Oaks Hospital, Overton, Kansas, employed Grace A Garrett, Overton Park, Kansas, as an experienced Medical Records Specialist from October 2020 to October 21, 2021. In her role, she is responsible for “coding” procedures and treatments performed at the Hospital for medical insurance billing and reimbursement purposes. Each medical treatment event is “coded” using a universal medical coding system from ICD-9-CM according to the physician’s diagnosis and treatment of the patient. ICD-9-CM helps hospitals, doctors, and insurance companies use a consistent enterprise-wide common language.
I. Erroneous Coding Discovery and Internal Staff Notification
In June 2021, while reviewing Walter Ridley’s patient medical record related to a different issue of Medicare reimbursement denials, Garrett, the original source, learned that there was an error in the medical coding procedure for Ridley, as his physicians’ diagnosis compared to his insurance reimbursement code were different. More specifically, Twin Oaks physicians diagnosis for each of the patients from River Crest indicated “upper respiratory infection”. Moreover, test was conducted to rule out a severe respiratory infection. Mr. McRaney highlights possible scenarios that ought to have taken place in the event the patients suffered from a severe respiratory infection, including, but not limited, to consulting pulmonary specialists as well as obtaining digital MRI and CT scans of the patients’ lungs. Absence of the above scenarios suggest that Ridley was treated for “basic pneumonia,” but the medical code in the reimbursement billing system indicated he was treated for “severe pneumococcal pneumonia.” Therefore, at a staff meeting on June 3, 2021, Garrett alerted Charles McRaney, the Records Supervisor, and Rosemary Rinehart, Twin Oaks Hospital Administrator, about a potential mistake in the reimbursement coding process. This notification resulted in McRaney initiating an inquiry about Garrett’s question regarding the medical coding process.
II. External Notification and Medicare Intermediary Follow-Up
Rinehart directed McRaney to look into Garrett’s question regarding the erroneous coding practice On June 10, 2021, after a seven-day delay and persistent follow-up by Garrett, McRaney contacted Leslie Ross at Mid-West Health Insurance in Kansas City, KS, by phone. Ross is the regional Medicare insurance intermediary. (Footnote, who are they and What do they do?) After McRaney’s phone discussion with Ross, on June 15, 2021, Rinehart and McRaney received a formal letter from Ross cautiously providing provisional (temporary) coding practice approval. In the letter, not only did Ross indicate the upcoding practice as problematic but requested additional information to support full approval or correction of the coding practice in question. Of significance, Ross’s letter dated June 15, 2021 was received by McRaney and Reinhart, one day before Medicare submission of the fifteen upcoded records on June 16, 2021. Additionally, McRaney decided that follow-up and providing more details to Ross was unnecessary since provisional approval of the upcoding practice was granted in the Ross letter. Further, McRaney assumed that they were correct in their upcoding practice. Hence, McRaney decided to continue the erroneous coding practice despite acknowledging that the method was not officially approved and supported by Ross.
III. Relator Expanded Investigation and FCA Reporting
McRaney did notify Garrett of the provisional upcoding practice provisional approval. However, based upon McRaney’s decision to continue the erroneous upcoding practice, Garrett conducted an additional medical records review from July 2021 through August 2021. Garrett’s extended investigation revealed fourteen other patients treated by physicians at Twin Oaks Hospital from February 2021 through May 2021. These medical records indicate that an additional fourteen patients were treated for “basic pneumonia” but coded in the Medicare billing system as being treated; for “severe pneumococcal pneumonia.” (Footnote and Explanation) Notably, Ridley and the other fourteen patients who were erroneously coded were all residents from the local River Crest Retirement Community. The River Crest Retirement Community opened in January 2021, has over three hundred residents, and is located about a mile down the road from Twin Oaks Hospital. Garrett also conducted a cross-record review to compare patients with similar physical characteristics to the fifteen River Crest patients to confirm her findings. Grace identified two Twin Oaks Hospital patients who were not residents of River Crest and were treated by Twin Oaks physicians for “basic pneumonia.” In the Medicare insurance system, these two patients were coded correctly as being treated for “basic pneumonia” and not “severe pneumococcal pneumonia.” On June 16, 2021, the fifteen upcoded medical treatment claims for the River Crest Retirement Community patients were collectively submitted electronically to Medicare for reimbursement. At that point, Garrett had convincing evidence of upcoding fraud by her employer. Garrett contacted the Department of Health and Human Services (DHHS) Inspector General (IG) via the Medicare Fraud tip-line to report her generalized (non-detailed) findings anonymously. However, Garrett left a voicemail message for Christopher Heller, DHHS IG, centered around Ridley’s medical reimbursements. Garrett mistakenly called Heller’s residential number instead of the official hotline number. Nevertheless, Garrett’s minimal, non-specific information failed to provide Heller with enough substantial and creditable information to initiate an investigation.
IV. Relator’s False Theft Accusation and Hospital Profit Incentive Program
On August 12, 2021, just two weeks before FCA claim submission, Garrett was falsely accused of theft of hospital property by McRaney under the direction of Rinehart. Rinehart, on behalf of the Hospital, apologized to Garrett. Retaliatory and harassing behaviors by employers are closely evaluated and remedied under FCA. Also, Twin Oaks Hospital has an incentive program that rewards employees for helping the Hospital establish profit. Departments are incentivized to revenue build and cost cut. Hospital employees’ efforts result in end-of-year bonuses based upon independent auditor reports of hospital profitability. All hospital management employees, including McRaney, are participants in the incentive program.
ARGUMENT
Summary judgment is appropriate only if the movant (Twin Oaks Hospital), who has the burden of proof, shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law, and, in making that determination, a court must view the evidence in the light most favorable to the opposing party.” The FCA was enacted to encourage public reporting of fraudulent claims for payment made to the United States government by, among other things, protecting whistleblowers from retaliation. Notably, in this FCA claim, three items are at issue , and four items are not at issue. Therefore, considering all inferences in the light most favorable to Garrett, the facts demonstrate a genuine dispute of material facts in this FCA claim. Hence, summary judgment should be denied. Liability exists, burden of proof in substantive causes of Garrett – “preponderance of the evidence” – statutory burden of proof must be included.
I. Jurisdictional Argument
In the context of FCA, there are limits to a relator’s right to bring a qui tam suit. One such limit is known as the public disclosure bar. The bar compels courts to dismiss qui tam claims if substantially the same allegations alleged in the action or claim were publicly disclosed unless the Relator is an original of the information. In First National Bank of Arizona v. Cities Service Co., the court noted Rule 56’s provision that a party opposing a motion for summary judgment may not rest upon the mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial. An issue of fact is genuine only if there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.
Of note, FCA does not require that the public disclosure identify the statutory basis for the allegations or transactions but only requires public disclosure of the material elements of the fraudulent transaction, even if the disclosure contains no allegation of wrongdoing.
To determine a jurisdictional bar, the Court requires a four-step inquiry. (1) whether the alleged “public disclosure” contains allegations or transactions from one of the listed sources; (2) whether the alleged disclosure has been made “public” within the meaning of the False Claims Act; (3) whether the Relator’s complaint is “based upon” this public disclosure; and, if so, (4) whether the Relator qualifies as an “original source.”
Disclosure and Public disclosure
The public disclosure requirement of § 3730(e) (4) (A) was designed to preclude qui tam suits based on information that would have been equally available to strangers to the fraud transaction had they chosen to look for it as it was to the relator. Public disclosure occurs only when the allegations or fraudulent transactions are affirmatively provided to others not previously informed thereof. However, public disclosure requires more than just public access to information. Rather, the allegation of fraud or the critical elements of the fraudulent transaction themselves must be in the public domain. In addition, “the relator must possess substantive information about the particular fraud, rather than merely background information which enables a putative relator to understand the significance of the publicly disclosed transaction or allegation. When such information surfaces publicly, there is little need for qui tam actions, which would tend to be suits that the government presumably has chosen not to pursue or which might decrease the government’s recovery in suits it has chosen to pursue.
In discussing the particular type of information that must be disclosed under § 3730(e) (4) (A), the court in United States ex rel. Springfield Terminal Ry. v. Quinn, went on to define fraud as requiring the “recognition of two elements: a misrepresented state of facts and a true state of facts.”
Twin Oaks alleges that Garrett publicly disclosed allegation and transactions information under two separate events that barred her from bringing an FCA claim as the original source. Twin Oaks first cites the press conference with Congressman Chamberlain and second the DHHS IG voicemail hotline complaint Garrett made to an incorrect number.
Regarding Congressman Chamberlain’s press conference, it is unmistakable that the context of the alleged disclosure does not, in any manner, allege or hint at fraud or fraudulent activity. Instead, Congressman Chamberlain repeatedly addresses the issue of “bureaucracy” and improving quick and easy access to medicare for senior citizens.
Discuss DHHS IG
Based upon
In United States ex rel. Precision Co. v. Koch Indus., 971 F.2d 548 (10th Cir. 1992), the court determined that “based upon” in 31 U.S.C. § 3730(e) (4) (A) means “supported by.” Id. at 552. Thus, it is necessary to ascertain whether substantial identity exists between the publicly disclosed allegations or transactions and the qui tam complaint.
Original source
To qualify as an original source, the relator must show that she (1) “has direct and independent knowledge of the information on which the allegations are based” and (2) “has voluntarily provided the information to the Government before filing an action under the section which is based on the information.”
“Direct” has been interpreted to require that the relator witness some aspect of the fraudulent activity himself or otherwise discover, through his own labor, the information underlying his allegations. “Independent” means knowledge that is not itself dependent on public disclosure.
In the present case, Garrett is the original source of the information for reason that she solely embarked to investigate and uncover the fraud that was taking place at Twin Oaks Hospital against the government. Garrett never interacted with any previous report or document alleging fraud on the part of Twin Oaks Hospital.
In 2010, the Patient Protection Affordable Care Act (PPACA) amended the FCA to narrow the public disclosure bar and expand the ability of the Relator to qualify as an original source. In this case, Garrett is the original source of information. Twin Oaks alleges that Garrett publicly disclosed allegation and transactions information under two separate events that barred her from bringing an FCA claim as the original source. Twin Oaks first cites the press conference with Congressman Chamberlain and second the DHHS IG voicemail hotline complaint Garrett made to an incorrect number. Not only does Garrett successfully meet all the elements of the four-step inquiry classifying her as the original source, but the first Defendant allegation is an issue about Medicare reimbursement for Ridley and not fraudulent Medicare claim submissions, hence no public disclosure. The second allegation is mainly about Ridley’s Medicare reimbursements. Of note, the anonymous voicemail Garrett provided DHHS IG did not materially provide a source sufficient to initiate a formal investigation; again, no public disclosure. In recent 10th District cases, the Court has held that even if the information were public before submitting an FCA claim, materially adding to the data is an exception to the original source bar(need 10th circuit means with materially adds). In a separate case, the Court held that there had been prior public disclosure, but the Relators were still deemed to be the original source. The court took note that none of the public documents disclosed the alleged fraud. It was only through independent investigation, deduction, and effort that Relators discovered the alleged fraud. Consequently, the court held that the Relators “had direct and independent knowledge of the fraud allegedly committed since they are the people responsible for ferreting it out in the first place.
Genuine disputes of material facts exist, and a reasonable jury could find that public disclosure did not occur. Even if it did, Garrett is an “original source”; therefore, summary judgment must be denied.
II. Merits Argument
…Under the False Claims Act ( FCA), “[a]ny person” who, “ knowingly presents, or causes to be presented, to an officer or employee of the United States Government ․ a false or fraudulent claim for payment or approval,” is liable to the government for a civil penalty, treble damages… Three levels of knowledge defined from the case law or statutes False elements of a claim are “material” under FCA if they tend to influence or are capable of influencing government action. Establish falsity – Morton case (Garrett wants to use exception in Morton about proof of falsity” – knowledge elements from the statute – what made them conclude that the relators were the original source in Kennard v Comstaock? The Court held that a government contractor knowingly submitted false payment requests.. …knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by [the] government (Charts reflected treatment – Actual know service polikov). The Court held that a doctor knowingly performed unnecessary heart surgeries and was reimbursed.” Twin Oaks “knowingly” submitted materially and objectively “false” Medicare claims for reimbursement. The following facts refer:
- Twin Oaks delayed seven days before contacting the regional Medicare Intermediary to verify their upcoding practice in question.
- Twin Oaks decided to fully accept the “provisional approval” in the letter dated June 15, 2021, from the Medicare Intermediary as upcoding practice approval while purposely ignoring the upcoding practice concerns outlined in the letter by the Intermediary.
- Twin Oaks submitted fifteen upcoded claims to Medicare for reimbursement on June 16, 2021, one day after receiving the cautionary letter from the Medicare Intermediary.
- Twin Oaks failed to provide additional information to the Medicare Intermediary to positively verify and resolve the upcoding practice in question.
- Twin Oaks remained committed to and defended a known unapproved upcoding practice.
Genuine disputes of material fact exist, and a reasonable jury could find that Twin Oaks knowingly submitted false claims; therefore, summary judgment should be denied.
CONCLUSION
Relator Grace A. Garrett respectfully requests that the Court deny the Defendant’s Motion for Summary Judgment and docket this case for trial for all the preceding reasons.
Date: January 12, 2022 Signature of Attorney: 5200893
Printed Name of Attorney: William L. Sheffield
Kansas Bar Number: 9203B90
D. Kansas Bar Number: 0020220
Name of Law Firm: Sheffield and Major
Street Address 190 Seville Place
State and Zip Code: Kansas City, Kansas 64111
Telephone Number: (816) 900-4220
Facsimile: (816) 900-4221
Email Address: shef@sheffieldandmajor.com
Attorney for Plaintiff/Relator, Grace A. Garrett
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that I caused a copy of the foregoing plaintiff’s response to Defendant’s Motion for Summary Judgment and Memorandum of Law in Opposition to Defendant’s Motion for Summary Judgment to be sent via U.S.P.S. Express Mail, postage prepaid, and to be delivered by hand this 12th day of January 2022, to counsel for Defendant, Gail Gentry, Esq., Gentry, Steyn, and Hoffman, 567 Harrison Place, Overland Park, Kansas 64111.
Date: January 12, 2022 Signature of Attorney: 5200893
Printed Name of Attorney: William L. Sheffield
Kansas Bar Number: 9203B90
D. Kansas Bar Number: 0020220
Name of Law Firm: Sheffield and Major
Street Address 190 Seville Place
State and Zip Code: Kansas City, Kansas 64111
Telephone Number: (816) 900-4220
Facsimile: (816) 900-4221
Email Address: shef@sheffieldandmajor.com
Attorney for Plaintiff/Relator, Grace A. Garrett
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