United States District Court, D. Columbia
August 31, 2005.
UNITED STATES OF AMERICA, ex rel. SHEILA EL-AMIN, et al., Plaintiffs/Relators,
THE GEORGE WASHINGTON UNIVERSITY, Defendant.
The opinion of the court was delivered by: JOHN PENN, Senior District Judge
This matter came before the Court on Defendant's Motion for
Summary Judgment  and Relators' Motion for Partial Summary
Judgment on Seven Steps Liability . On October 8, 2004, the
Court issued Orders [581, 582] denying both motions because
genuine issues of material fact remain as to the claims set forth
in the Third Amended Complaint. This memorandum opinion sets
forth the reasons for those orders. Additionally, although the
Court addressed Defendant's Motion to Dismiss  separately,
see Mar. 25, 2005 Mem. Op., it reserved judgment on one issue
raised in that motion as well as in Defendant's Motion for
Summary Judgment which it addresses here.
Plaintiffs brought suit on behalf of the United States under
the qui tam provision of the False Claims Act ("FCA").
31 U.S.C. §§ 3729-3733. The qui tam plaintiffs ("relators"), four
Certified Registered Nurse Anesthetists ("CRNAs") formerly
employed by defendant at its hospital, allege that from 1989 to 1995, George Washington
University ("GWU") violated the FCA by: (1) knowingly presenting,
or causing presentation of, false submissions to the Health Care
Finance Administration for Medicare reimbursement, see
31 U.S.C. § 3729(a)(1); and (2) creating and using, or causing
creation or use of, false statements and records in order to
ensure payment of the fraudulent Medicare claims, see
31 U.S.C. § 3729(a)(2).*fn1 Third Am. Compl. ¶¶ 62-65. The claims
arise from defendant's anesthesiologists' provision of anesthesia
services to Medicare patients and the accompanying documentation
The Third Amended Complaint alleges that GWU knowingly or
recklessly submitted claims to Medicare for reasonable charge
reimbursement when, in fact, the anesthesiologists failed to
satisfy a requirement for reimbursement known as the "Seven
Steps" regulation. Third Am. Compl. ¶¶ 27-28, 30-35. Both
defendant and relators seek summary judgment on the Seven Steps
violation allegations, proffering different legal interpretations
of what the regulation required in support of their positions.
For purposes of these motions, the disputed issue is who may
perform the Seven Steps. Relators argue that the regulation
requires anesthesiologists to perform all of the Seven Steps
themselves and does not permit delegation of the steps to other
qualified medical professionals, such as CRNAs or medical
students. See, e.g., Rel.'s Mot. Part. Summ. J. at 2. Defendant
argues that the regulation permits anesthesiologists to delegate
performance of the Seven Steps to other qualified medical
personnel. See, e.g., Def.'s Mem. Summ. Mot. Summ. J. at 7-9.
The Third Amended Complaint also alleges that GWU knowingly or
recklessly submitted claims to Medicare for reimbursement at the highest rate, that of
"personal performance", when in fact the physician had not met
the requirements for billing at that rate. Third Am. Compl. ¶¶
24-26. Defendant has moved for dismissal of or summary judgment
on these claims, arguing that it was required by the regulation
to bill procedures known as "one-on-ones", in which a physician
was involved in one procedure with assistance from one medical
student or CRNA, as personally performed and thus there was no
violation. See, e.g. Def.'s Mot. Dismiss at 8-12.
I. Summary Judgment Standard
Federal Rule of Civil Procedure 56(c) mandates that summary
judgment shall be granted "if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10 (1986). The moving party bears
the initial burden of identifying evidence it believes
demonstrates the absence of any genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548,
2553 (1986). In response, "[a]n adverse party may not rest upon
the mere allegations or denials of the adverse party's pleading,
but the adverse party's response, by affidavits or as otherwise
provided in this rule, must set forth specific facts showing that
there is a genuine issue for trial." Fed.R.Civ.P. 56(e).
Summary judgment will be granted "against a party who fails to
make a showing sufficient to establish the existence of an
element essential to that party's case, and on which the party
will bear the burden at trial." Celotex, 477 U.S. at 322,
106 S.Ct at 2552.
Whether a fact is material is determined by the substantive
law. "Only disputes over facts that might affect the outcome of the suit under the governing law
will properly preclude the entry of summary judgment."
Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. A dispute about a
material fact is genuine "if the evidence is such that a
reasonable jury could return a verdict for the non-moving party."
Id. "If the evidence is merely colorable, or is not
significantly probative, summary judgment may be granted." Id.
at 249-50, 106 S.Ct. at 2511 (internal citations omitted). In
ruling on a motion for summary judgment, the Court assumes the
truth of all evidence proffered by the non-moving party and draws
all legitimate inferences in its favor. Id. at 255,
106 S.Ct. at 2513.
II. False Claims Act
Relators claim liability under the False Claims Act which
states that an actor shall be liable if he:
1) 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; [or]
2) 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
31 U.S.C. § 3729(a) (2000). The FCA defines "`knowingly' to mean
that a person . . . (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) (2000). "Reckless
disregard," for purposes of the FCA, is "an extreme version of
ordinary negligence," and "an extension of gross negligence."
United States v. Krizek, 324 U.S. App. D.C. 175, 183,
111 F.3d 934, 942 (1997).
III. Regulatory Background The regulation at issue implemented section 1887(a)(1) of the
Social Security Act, codified at 42 U.S.C. 1395xx. See
48 Fed. Reg. 8902, 8907 (March 2, 1983). That section directed the
agency, the Health Care Financing Administration ("HCFA") of the
U.S. Department of Health and Human Services,*fn2 to
promulgate a regulation establishing criteria for distinguishing
which constitute professional medical services, which
are personally rendered for an individual patient by
a physician and which contribute to the diagnosis or
treatment of an individual patient, and which may be
reimbursed as physicians' services under part B [of
Medicare, from those] which constitute professional
services which are rendered for the general benefit
to patients in a hospital or skilled nursing facility
and which may be reimbursed only on a reasonable cost
basis. . . .
42 U.S.C. § 1395xx (a)(1). Thus, the regulation distinguished
"physicians' services to an individual patient, which are
reimbursable on a reasonable charge basis under Part B" of
Medicare from "physicians' services to a provider, which are
reimbursable only on a reasonable cost basis."
48 Fed. Reg. at 8,907. The regulation set forth criteria for reasonable charge
reimbursement of physicians designed to ensure that it was only
available for services in which they furnished personal and
identifiable service to patients. See 42 C.F.R. §§ 405.550,
While section 405.550 of the regulation set forth requirements
applicable to physicians generally, section 405.552 created two
requirements particular to physicians furnishing anesthesiology
The first of these was the Seven Steps
regulation which required anesthesiologists to perform seven
specific tasks for each individual patient. Id. § 405.552(a)(1)
(1989-95). The second requirement was the "four concurrency
limit" which established that a physician was only eligible for
charge reimbursement if he was involved in four or fewer
anesthesiology procedures at the same time. Id. §
If an anesthesiologist failed to satisfy the general
requirements or the Seven Steps or exceeded the four concurrency
limit, his services were deemed "medically supervised" and thus
reimbursable only on a reasonable cost basis.
42 C.F.R. §§ 405.550(b), 405.552(b). However, if the general requirements and
the Seven Steps were satisfied and the four concurrency
limitation not exceeded, the procedure was charge reimbursable.
Charge reimbursement was broken down further into two levels,
"direct" or "personal" "performance" and "medical direction",
based on the physician's level of involvement with the
procedures. The direct and personal performance categories
described the highest level of physician involvement.*fn5 Medical direction described
lesser physician involvement, while still exceeding that of
IV. Concurrency Rates and Reimbursement Levels
A. Personal or Direct Performance
The regulation stated that direct performance, applicable from
1989 to 1991, described an anesthesiologist's administration of
anesthesia to a patient without assistance.
42 C.F.R. § 405.552(a)(2)(1989-91). The term "direct performance" was
replaced by "personal performance" on January 1, 1992. In a final
rule announcement, the agency clarified that "[its] prior
policies on payment for physician . . . services recognize that
the anesthesia service may be . . . [p]erformed by a teaching
anesthesiologist under an `attending physician' relationship [or]
[p]erformed by an anesthesiologist with assistance provided by an
anesthetist [and that under] this circumstance, the anesthesia
service is deemed to have been personally performed by the
anesthesiologist". 57 Fed. Reg. 33878, 33886-87 (July 1, 1992).
Thus, the agency clarified that what was reimbursable in this
highest category of performance included not just solo
performance by the anesthesiologist, as the rule seemed to state,
but also one-on-ones: a single procedure in which the physician
was continuously involved with a CRNA or student. See id.;
42 C.F.R. § 414.46(c)(2) (1992). In a similar matter, the agency ratified its existing practice
of reimbursing a physician for concurrent involvement in two
cases with two medical students (but not CRNAs) at the personal
performance level. It made clear that this rule only applied
through 1993; beginning in 1994, this practice was considered
medical direction. 42 C.F.R. § 414.46(c)(2); see also
56 Fed. Reg. 59502, 59563 (Nov. 25, 1991).
B. Medical Direction
Medical direction, a lower level of physician involvement and
reimbursement, applied to all procedures which did not qualify as
directly or personally performed because the physician was
involved in a greater number of concurrent procedures, but where
the physician met the Seven Steps requirements and still
"direct[ed] no more than four anesthesia procedures concurrently
and [did] not perform any other services while he or she [was]
directing the concurrent procedures." 42 C.F.R. § 405.552(a)(2)
(1989-95) (punctuation omitted).
V. Defendant's Personal Performance Argument
Defendant has moved for dismissal or summary judgment on those
of Plaintiff's claims, set forth in paragraphs 24-26 of the Third
Amended Complaint, which would hold it liable for billing as
personally performed procedures in which defendant was involved
in a single procedure with one CRNA or student assisting. Def's
Mot. Summ. J. at 42-43; Def's Mot. Dismiss at 8-12. Defendant
argues that because the agency "deemed" one-on-ones to be
personally performed and not medically directed, billing
one-on-ones as personally performed was always proper. Thus, the
argument goes, the regulation's requirement that the physician be
"continuously involved" in a one-on-one procedure, see
42 C.F.R. § 414.46(c)(2)(ii) (1992-95) was waived by the language
stating that when a physician is involved in one procedure with
one anesthetist "the procedure is deemed to be furnished by the
anesthesiologist." 42 C.F.R. § 414.450(d) (1992-95).
Defendant's interpretation of the regulation is incorrect.
Defendant has cited no authority for the notion that the term
"deem" implies that all other requirements no longer apply.
Understood in context, the use of the word "deem" simply
clarifies which one of the two professionals involved in a
procedure the agency considers to have performed it for billing
purposes. Thus, the agency stated "[i]f an anesthesiologist and
an anesthetist are involved in a single procedure, the procedure
is deemed to be furnished by the anesthesiologist."
42 C.F.R. § 414.450(d) (1992-95). The agency followed by stating that payment
for the anesthetist's service may not be made unless shown to be
medically necessary. Id. Thus, the term is used to clarify who
should bill for performance of one-on-ones.
The lack of support for defendant's argument contrasts with the
language of the regulation stating when personal performance is
HCFA considers an anesthesia procedure to be
personally performed by a physician if it meets one
of the following circumstances:
(i) The physician personally performs the entire
(ii) The physician is continuously involved in a
single case involving a [CRNA or student].
(iii) For services furnished before January 1, 1994,
the physician establishes an attending physician
relationship in one or two concurrent cases involving
a [student]. . . .
42 C.F.R. § 414.46(c)(2) (1992-95). Hence, personal performance
includes procedures in which the physician is "continuously
involved" in one case with assistance from a CRNA or student.
See id. GWU argues finally that the language conflicts and thus its
billing was based on a reasonable interpretation of the
regulation, negating any possible finding of scienter under the
FCA. This argument also fails. As stated above, the Court does
not find defendant's reading plausible. Furthermore, the logical
extension of defendant's argument is that none of the other
regulatory requirements, including the seven steps requirements,
would need to be met for oneon-one procedures. There is simply no
authority for this proposition.
In United States ex rel. Minnesota Ass'n of Nurse Anesthetists
v. Allina Health System Corp., 276 F.3d 1032 (8th Cir. 2002)
("MANA"), the Court of Appeals for the Eighth Circuit reversed
a district court decision granting defendant summary judgment on
claims based on false personal performance billing. The district
court had held that the regulations "were susceptible to the
interpretation that a physician need not have been continuously
physically present in the operating room to bill a case as
personally performed" and, accordingly, this ruled out the
possibility that the FCA scienter was present. Id. at 1052
(internal quotation marks omitted). The Court of Appeals
reversed, noting that, even if the regulations were ambiguous, if
relators "show[ed] the defendants certified compliance with the
regulation knowing that the HCFA interpreted the regulations in a
certain way and that their actions did not satisfy the
requirements of the regulation as the HCFA interpreted it, any
possible ambiguity of the regulations [would be] water under the
bridge." Id. at 1053. Thus, regardless of arguable ambiguities,
scienter could still be established if defendants knew how the
agency actually interpreted the regulation. Furthermore, the
court noted that an ambiguity regarding what it meant to be
"continuously involved" would only permit judgment if this was
"the only respect in which the anesthesiologist fell short of
fulfilling the personal performance standard". Id. at 1054-56. As in MANA, summary judgment is improper. Here, the alleged
ambiguity is even less plausible. In MANA, the claimed
ambiguity dealt with whether continuous involvement required the
physician's continuous presence in the operating room. See id.
at 1053. Here, defendant argues that continuous involvement is
not required at all. Def's Mot. Dismiss at 8-12. Even if this
were a reasonable interpretation, it is still possible for
relators to show that defendant certified compliance with the
regulations knowing that the agency did not interpret it the same
way. Additionally, here, as in MANA, this is not the only
alleged violation of the personal performance standard.
VI. The Seven Steps Regulation
The parties advocate different interpretations of the Seven
Steps regulation. Relators claim that the regulation requires
anesthesiologists to perform all of the Seven Steps themselves,
see, e.g., Rel.'s Mot. Part. Summ. J. at 2, while defendant
argues that the regulation permits anesthesiologists to delegate
performance of the Seven Steps to other qualified medical
personnel. See, e.g., Def.'s Mem. Summ. Mot. Summ. J. at 7-9.
Regulatory interpretation begins with the language of the
regulation itself. See Seattle Opera v. NLRB, 352 U.S. App.
D.C. 53, 57, 292 F.3d 757, 761 (2002). Here, the Seven Steps
regulation states that a physician performing anesthesia services
is eligible for reasonable charge reimbursement, if:
(1) For each patient, the physician
(i) Performs a pre-anesthetic examination and
(ii) Prescribes the anesthesia plan;
(iii) Personally participates in the most demanding
procedures in the anesthesia plan, including
induction and emergence; (iv) Ensures that any procedures in the anesthesia
plan that he or she does not perform are performed by
a qualified individual. . . .;
(v) Monitors the course of anesthesia administration
at frequent intervals;
(vi) Remains physically present and available for
immediate diagnosis and treatment of emergencies; and
(vii) Provides indicated [post-anesthesia] care.
42 C.F.R. § 405.552(a)(1)(i)-(vii) (1989-95) (emphasis
The regulation thus plainly states that the
physician must perform the Seven Steps.
Despite this straightforward reading, defendant has offered a
theory to support its argument that anesthesiologists were not
actually required to perform the Seven Steps themselves. The
theory is that medical practices at the time allowed CRNAs and
students to perform the tasks included in the Seven Steps
regulation and the regulation was intended to codify those
existing medical practices. Thus, defendant argues that the
language of the regulation cannot be given its plain meaning
(which would require doctors to perform those tasks) because it
is in fact composed of terms of art which described those
existing medical practices (which allegedly permitted non-doctors
to perform those tasks). Defendant thus urges the Court to look
to its experts to explain those terms of art. E.g., Def.'s Mem.
Summ. Mot. Summ. J. at 7-9. Relators argue that the regulation's
plain meaning governs and the doctors must perform the Seven
Steps. E.g., Rel.'s Mot. Part. Summ. J. at 2.
Defendant's theory is incorrect because it confuses
reimbursement standards with medical standards. In brief, the
regulation was intended to change reimbursement standards, not to
address medical standards. Thus, medical standards were not
incorporated as "terms of art" and there is no reason to look to
defendant's experts to explain them. The regulatory history is clear that although the regulation
was not intended to change anesthesiology practice by setting
quality or care standards, see 48 Fed. Reg. 8902, 8928, its
purpose was to resolve excessive and duplicate reimbursement in
the Medicare system by clarifying what was required for each
level of reimbursement. See 48 Fed. Reg. 8902, 8904-05, 8928.
The then-president of the American Society of Anesthesiologists,
Phillip Bridenbaugh, recognized this when he advised in 1997:
It is imperative that all Medicare providers . . .
realize that these federal regulations are legal
requirements only for receiving reimbursement for
services rendered. In spite of an often voiced
complaint from many physicians that the government is
telling us how to practice medicine, the simple truth
is: you can practice as you please; just do not send
them the bill for payment."
Phillip O. Bridenbaugh, "Knowingly?" Ignorance Is No Excuse!,
ASA Newsletter, Vol. 61, No. 7, President's Page, at
Thus, while not intended to change anesthesiology care generally,
the regulation was created to change reimbursement within the
Because the Seven Steps regulation was intended to change
reimbursement practices, it was not composed of terms of art
which simply codified existing medical standards. Furthermore,
although the Seven Steps regulation included terms with medical
definitions, such as "pre-anesthesia evaluation and examination",
"induction", and "emergence", and although dispute as to these
terms' precise definitions may later arise, any such dispute is
not currently relevant. That is because the key term,
"physician", was neither a term of art nor disputed.
Additionally, the regulatory history of the Seven Steps
confirms that the agency intended the term "physician" to be
given its plain meaning. For example, the regulatory history of
step one, which required the physician to "[perform] a
pre-anesthetic examination and evaluation", confirms that the physician was himself required to perform the
exam and evaluation. In the 1983 final rule announcement, a
commentator asked whether it was permissible to bill for charge
reimbursement when one anesthesiologist in a group practice
performed the pre-anesthetic examination and another
anesthesiologist in that practice performed or medically directed
the actual procedure. The agency responded that this was
acceptable so long as the anesthesiologists were in a group
practice. The agency noted, however, that "a physician member of
the group would have to perform all of the component parts of the
anesthesia services; they could not be performed, for example, by
an anesthesiology resident." 48 Fed. Reg. 8902, 8928. This
clarifies that only an anesthesiologist, not a student or, by
extension, a CRNA, could perform step one, or indeed, any step,
if the procedure was to be eligible for charge reimbursement.
Furthermore, in 1998, subsequent to the time period relevant
here, the agency proposed changing step one from requiring the
anesthesiologist to perform a pre-anesthesia examination and
evaluation to allow an anesthesiologist to review such an
examination and evaluation performed by another qualified
individual. 63 Fed. Reg. 30818, 30841 (June 5, 1998);
63 Fed. Reg. 58814, 58842 (Nov. 2, 1998). The agency ultimately decided
not to adopt this change, retaining the requirement that the
physician perform step one himself. 63 Fed. Reg. at 58844-45.
This history shows the agency clearly declined to adopt a rule
which would have allowed someone other than the physician to
perform step one.
The rules regarding teaching hospitals further bolster this
interpretation. They provided that, when students were involved
in providing care, a physician could satisfy step one by
reviewing the patient's history and examination and then
performing his own examination. 42 C.F.R. § 405.521(1989-95).
Thus, despite this special teaching situation, the physician was
still required to perform step one himself.
The regulatory history of step two likewise confirms that the
physician was required to "[prescribe] the anesthesia plan". In
1998, after the period at issue here, the agency chose not to
adopt a proposed loosening of step two which would have permitted
the physician simply to "[participate] in the development of the
anesthesia plan and give final approval to the proposed plan."
63 Fed. Reg. at 58843-44. Noting that "the medical direction
requirements specify the activities that the medically directing
physician, who is usually an anesthesiologist, must perform" to
merit reasonable charge reimbursement, the agency ultimately
declined to lower the bar. 63 Fed. Reg. at 58843. Thus, step two
is clear in its command that the physician himself prescribe the
Step seven's history subsequent to the relevant period follows
the same trend. Step seven required the physician to "[provide]
indicated post-anesthesia care". In 1998, the agency declined to
change this to "[provide] indicated post-anesthesia care or
[ensure] that it is provided by a qualified individual."
63 Fed. Reg. at 58843. Thus, it is clear that the physician, and not
another qualified individual, had to perform step seven.
While all of these examples confirm that the physician had to
perform the Seven Steps, defendant offers a further argument to
the contrary. Defendant contends that requiring a physician to
perform the Seven Steps himself is inconsistent with the general
rule, set forth in 42 C.F.R. § 405.550, that only services which
"ordinarily require performance by a physician" are reimbursable.
Mem. Supp. Def.'s Mot. Summ. J. at 16. Defendant points to
evidence that nurse practitioners performs tasks which are
included in the Seven Steps. Id. The argument is thus that the
Seven Steps cannot require physicians to perform services which
other individuals also perform.
This argument is defeated by the regulatory history, which
reveals that the agency initially proposed allowing reimbursement
only for services which "ordinarily [require] performance by a
physician, and [are] not frequently and consistently furnished by
nonphysicians". 48 Fed. Reg. 8902, 8905. Ultimately, the proposed
requirement that services "not [be] frequently and consistently
furnished by nonphysicians" was not adopted. Part of the reason
for this was that the agency found that it was "not essential to
determine the degree to which a service is performed by
nonphysicians in order to decide whether the service requires
performance by a physician" and because this would preclude
reimbursement for services "when in a relatively few situations
or circumstances the particular service is being safely performed
by nonphysicians." 48 Fed. Reg. at 8908-09. This history reveals
that the agency explicitly contemplated charge reimbursement for
physician services which might also be performed by a
nonphysician. See 48 Fed. Reg. at 8905-09. Thus, there is no
conflict created by requiring physicians to perform the Seven
Steps when nonphysicians might also on occassion perform some of
the tasks. For the above reasons, it is clear that the physicians
were required to perform the Seven Steps.*fn8
Despite supporting the correct legal position, relators are not
entitled to summary judgment because genuine issues of material
fact remain as to defendant's physicians' performance of the
Seven Steps and the requirements of liability under the FCA.
Likewise, having failed in its legal argument, defendant's quest
for summary judgment cannot succeed solely on its argument that
relators have put forward no competent evidence to create a
genuine issue of material fact.
While the record is too extensive to chronicle all factual
conflicts, dispute over whether defendant had the requisite FCA
intent is sufficient to preclude summary judgment on all Seven
Steps violation claims. For example, while relators contend that
defendant had knowledge of false billing based on a report
prepared by Joseph Locke, see Locke Report, Rel.'s Opp'n Def's
Mot. Summ. J., Exh. 67, defendant offers evidence of alleged
errors in that report which led to it being discounted. E.g.,
Gehen Dep. at 53, Def.'s Opp'n Rel's Mot. Part. Summ. J., Exh. D.
Weighing such evidence is not appropriate at the summary judgment
Accordingly, for the reasons stated above, the Court has denied
both parties' motions for summary judgment.
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