United States District Court, District of Columbia
UNITED STATES OF AMERICA, et al., ex rel. TINA D. GROAT, Plaintiffs,
BOSTON HEART DIAGNOSTICS CORPORATION, Defendant.
B. WALTON United States District Judge.
plaintiff/relator, Tina D. Groat, M.D., brings this qui
tarn action against the defendant, Boston Heart
Diagnostics Corporation ("Boston Heart"), under the
federal False Claims Act, 31 U.S.C. § 3729 (2012), and
various analog state false claims statutes. See
Relator's Second Amended Complaint Pursuant to the
Federal False Claims Act, 31 U.S.C. §§ 3729 et
seq. and Pendent State False Claims Acts ("2d Am.
Compl.") ¶ 1. Currently before the Court are the
Relator's Motion for Judicial Notice ("Relator's
Mot.") and Boston Heart Diagnostics Corporation's
Motion to Dismiss Relator's Second Amended Complaint
("Def's Mot."), which seeks dismissal of the
plaintiffs Second Amended Complaint pursuant to Federal Rules
of Civil Procedure 9(b) and 12(b)(6). See Def's
Mot. at 2. Upon careful consideration of the parties'
submissions,  the Court concludes that it must grant the
relator's motion for judicial notice and grant in part
and deny in part Boston Heart's motion to dismiss.
overview of the Medicare program will help elucidate the
relator's allegations in this case. Medicare is a federal
health insurance program for the elderly and people with
disabilities. See 42 U.S.C. § 1395c (2012).
Medicare Part B, which provides outpatient coverage for,
among other things, diagnostic laboratory tests, see
42 C.F.R. § 410.32 (2016), only covers medical services
that are “reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve the functioning
of a malformed body member, ” 42 U.S.C. §
1395y(a)(1)(A). “[Laboratory t]ests that are performed
in the absence of signs, symptoms, complaints, personal
history of disease, or injury are not covered except when
there is a statutory provision that explicitly covers tests
for screening as described.” Medicare Claims Processing
Manual: Chapter 16-Laboratory Services § 120.1,
available at https://www.cms.gov/
(last visited May 16, 2017).
establishes its national payment policy for covered items or
services through national coverage determinations, which are
formal decisions by the Secretary of Health and Human
Services regarding whether, and under what circumstances,
Medicare covers a particular item or service. See 42
U.S.C. § 1395ff(1); 42 C.F.R. § 405.1060(a).
National coverage determinations are binding on both Medicare
contractors and administrative law judges, who preside over
Medicare coverage appeals. See 42 U.S.C. §
1395ff(1)(A)(i); 42 C.F.R § 405.1060(a). Medicare
contractors process and pay Medicare claims within a
specified jurisdiction on behalf of the Centers for Medicare
and Medicaid Services (“CMS”), and have authority
to issue local coverage determinations for that jurisdiction.
See 42 U.S.C. § 1395ff(f)(2); see also
id. § 1395m-1(g)(noting that Medicare contractors
may issue local coverage determinations regarding clinical
diagnostic laboratory tests under the same process). Local
coverage determinations, like national coverage
determinations, govern Medicare coverage for a particular
item or service. See id. § 1395ff(f)(2)(b).
Administrative law judges “give substantial
deference” to local coverage determinations, but they
are not bound by them. 42 C.F.R. § 405.1062.
entity seeking reimbursement for services provided to
Medicare patients must submit a CMS-1500 form to the Medicare
contractor. See United States ex rel. Hobbs v. MedQuest
Assocs., Inc., 711 F.3d 707, 711 (6th Cir. 2013).
“The[ CMS-1500] form reflect[s] the treatment or
services provided and identif[ies] the [entity that] provided
them. Tests, supplies, and services are correlated to a
series of unique numbers, called CPT codes, which quickly
convey to the [claims processor] what reimbursable expenses
the [entity] has incurred.” Id. at 711. The
CMS-1500 form requires the entity to certify that, among
other things, “the services on this form were medically
necessary.” Health Insurance Claim Form
(“CMS-1500”) at 2, available at
(last visited May 16, 2017).
Factual Background and Procedural History
relator is a medical doctor and the National Medical Director
of Women's Health and Genetics at United Healthcare
(“United”), 2d Am. Compl. ¶ 6, which is a
health insurance company that offers Medicare and Medicaid
insurance coverage, TriCare health insurance coverage, as
well as employer-sponsored and individual health insurance
coverage, id. ¶ 23. The relator alleges the
following in her Second Amended Complaint.
Heart is a clinical laboratory located in Framingham,
Massachusetts, which “provides diagnostic testing
related to cardiovascular health, ” 2d Am. Compl.
¶ 24, by “conducting laboratory tests that are
ordered by doctors and other healthcare providers, ”
id. ¶ 50. “To facilitate the ordering of
those tests, [Boston Heart] supplies doctors with pre-printed
test requisition forms which that doctor fills out and sends
to the [Boston Heart] laboratory along with the patient's
specimen that is to be tested.” Id.
These test requisition forms include a list of the tests that
the lab[oratory] performs for the doctor to select based on
the doctor's examination of the patient and subsequent
diagnosis. The form also groups certain tests together in
test panels, which allows the doctor to easily order several
tests at once simply by checking one box on the form.
Id. ¶ 51. “After the lab[oratory]
conducts the tests ordered, it bills the government [or
government intermediary] . . . for tests performed for
Medicare [and other government health insurance]
patients.” Id. ¶ 55.
relator alleges that various genetic and non-genetic
tests performed by Boston Heart are not
medically necessary for patients with the following four
diagnostic codes: (1) routine general medical examination at
a health care facility; (2) essential hypertension (high
blood pressure); (3) other and unspecified hyperlipidemia
(high cholesterol); and (4) other malaise and fatigue
(collectively, “the four diagnostic codes”).
See id. ¶¶ 57-59. Specifically, the
when any of these four [ ] diagnostic codes are given to a
patient in the absence of other diagnostic codes, the tests
set forth above are . . . known to be medically unnecessary
because they (1) do not and cannot predict the patient's
risk of future heart disease, (2) do not and cannot screen
for any currently existing heart disease in the patient, and
(3) provide no additional information regarding the
cardiovascular-related diagnoses sometimes used to justify
these tests, such as hypertension, hyperlipidemia, or malaise
and fatigue, and (4) have no bearing on any potential
treatments for those diagnoses.
Id. ¶ 59. According to the relator, when these
tests are ordered for patients with some or all of the four
diagnostic codes, they are used solely for screening purposes
on adults who do not exhibit “signs, symptoms,
complaints, or personal history of heart disease, ” and
thus are not covered by Medicare or other government health
care programs. Id. ¶ 70; see also id.
¶ 67. To support her allegation, the relator relies on
the Guideline for Assessment of Cardiovascular Risk in
Asymptomatic Adults in November 2010 (the
“Guideline”), jointly published by the American
Heart Association and the American College of Cardiology,
id. ¶¶ 61-62 (noting that the Guideline
“specifically recommends against certain of these tests
to assess the risk of developing heart disease”), as
well as various national and local coverage determinations
made by the government and its contractors, respectively,
id. ¶¶ 67-69, 73-74.
relator also relies on the data examined by her team at
United, which, in order to “evaluat[e] the drivers of
increased costs in women's care and genetic testing[, ] .
. . examined the volume and type of genetic testing
purportedly related to cardiac risk performed for thousands
of patients by hundreds of laboratories that bill to
United.” Id. ¶ 119. “Because
[United] provides and services [health insurance plans that]
are funded by Medicare and Medicaid dollars, [the r]elator
received and evaluated [United] data that showed that Boston
Heart submitted claims to [United] on behalf of patients
insured under [government health insurance plans] for the
tests at issue here.” Id. ¶ 136.
“[B]y examining data for the year 2013, ”
id. ¶ 120, the relator “identified a
combination of seven tests that are frequently performed and
billed by Boston Heart and specifically compared Boston
Heart's billing of that combination to other
laboratories, ” id. ¶ 121. According to
the relator, the comparison revealed that “Boston Heart
was an extreme outlier in the frequency of billing this
combination of seven tests, ” id. ¶ 122,
and that examination “of specific claims submitted to
United [ ] show that Boston Heart was billing for medically
unnecessary tests to screen for cardiac-related issues and
predict future cardiac risk, ” id. ¶ 124.
The relator alleges that “Boston Heart encourages
providers to order these medically unnecessary tests, ”
id. ¶ 132, through marketing materials and test
panels on pre-printed test requisition forms, see
id. ¶¶ 52, 94, 127, 132, and that
“General Practitioners and other non-cardiology
physicians are Boston Heart's primary target” for
its allegedly false marketing statements regarding the
medical necessity of its tests, id. ¶ 127, and
their ability “to predict cardiac risk, ”
id. ¶ 131. Ultimately, the relator met with
Boston Heart's CEO and its Vice President of Payer
Innovation and Strategy on August 15, 2014, and told them
“that their test panels included many unnecessary
tests.” Id. ¶ 128-30; see also
Relator's Opp'n at 35 (identifying the Boston Heart
meeting attendees as the CEO and Vice President of Payor
Innovation and Strategy).
on these factual allegations, the relator filed her original
complaint under seal on February 3, 2015. See
Relator's Complaint Pursuant to the Federal False Claims
Act, 31 U.S.C. §§ 3729 et seq. and Pendent
State False Claims Acts at 1, ECF No. 1. On May 11, 2015, the
relator filed her first amended complaint. See
Relator's Amended Complaint Pursuant to the Federal False
Claims Act, 31 U.S.C. §§ 3729 et seq. and
Pendent State False Claims Acts at 10, ECF No. 19. On August
19, 2016, the United States, along with the twenty-seven
states and the District of Columbia on whose behalf the
relator asserted false claims act violations, declined to
intervene in this case, see Notice of Election to
Decline Intervention and to Dismiss Claims Asserted on [ ]
Behalf of Maryland (Aug. 19, 2016), ECF No. 28, and the Court
dismissed the “claims brought by the relator on behalf
of the State of Maryland” and ordered that the case be
unsealed, Order at 1-2 (Aug. 24, 2016), ECF No.
October 27, 2016, the relator filed her Second Amended
Complaint. See 2d Am. Compl. at 1. Count I of the
Second Amended Complaint alleges both a violation of 31
U.S.C. § 3729(a)(1)(A), the “false claims”
provision of the False Claims Act, as well as a violation of
31 U.S.C. § 3729(a)(1)(B), the “false
statements” provision. See 2d Am. Compl.
¶¶ 143-44. Count II alleges a violation of 31
U.S.C. § 3729(a)(1)(G), the “reverse false
claims” provision of the False Claims Act. See
2d Am. Compl. ¶ 150. Counts III through XXXI allege
violations of twenty-seven states' and the District of
Columbia's false claims statutes. See id.
¶¶ 154-381. The defendant now moves to dismiss all
of the relator's claims pursuant to Federal Rules of
Civil Procedure 9(b) and 12(b)(6).
STANDARD OF REVIEW
complaint must contain “a short and plain statement of
the claim showing that the pleader is entitled to
relief.” Fed.R.Civ.P. 8(a)(2). Thus, to survive a
motion to dismiss for “failure to state a claim upon
which relief can be granted, ” Fed.R.Civ.P. 12(b)(6),
the complaint “must contain sufficient factual matter,
accepted as true, to ‘state a claim to relief that is
plausible on its face, '” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A
claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. (citing Twombly, 550
U.S. at 556). Although the Court “must treat the
complaint's factual allegations as true [and] must grant
[the] plaintiff the benefit of all reasonable inferences from
the facts alleged, ” Trudeau v. Fed. Trade
Comm'n, 456 F.3d 178, 193 (D.C. Cir. 2006) (first
alteration in original) (citation omitted), legal allegations
devoid of factual support are not entitled to this
assumption, see, e.g., Kowal v. MCI Commc'ns
Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Moreover, a
plaintiff must provide more than “a formulaic
recitation of the elements of a cause of action.”
Hinson ex rel. N.H. v. Merritt Educ. Ctr., 521
F.Supp.2d 22, 27 (D.D.C. 2007) (quoting Twombly, 550
U.S. at 555). “And, ‘[i]n determining whether a
complaint states a claim, the court may consider the facts
alleged in the complaint, documents attached thereto or
incorporated therein, and matters of which it may take
judicial notice.'” Farah v. Esquire
Magazine, 736 F.3d 528, 534 (D.C. Cir. 2013)
(alterations in original) (quoting Abhe & Svoboda,
Inc. v. Chao, 508 F.3d 1052, 1059 (D.C. Cir. 2007)).
claims are also subject to the heightened pleading
requirement of Rule 9(b), which provides that “[i]n
alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or
mistake.” Fed.R.Civ.P. 9(b); see also United States
ex rel. Heath v. AT & T, Inc., 791 F.3d 112, 123
(D.C. Cir. 2015) (applying Rule 9(b) to claims filed pursuant
to the False Claims Act). “The rule serves to
‘discourage the initiation of suits brought solely
for their nuisance value, and safeguards potential defendants
from frivolous accusations of moral turpitude.'”
Heath, 791 F.3d at 123 (alteration in original)
(quoting United States ex rel. Williams v. Martin-Baker
Aircraft Co., 389 F.3d 1251, 1256 (D.C. Cir. 2004)).
Further, “the complaint must be particular enough to
‘guarantee all defendants sufficient information to
allow for preparation of a response.'” Id.
(quoting Williams, 389 F.3d at 1256). “Rule
9(b) is not an antithesis of Rule 8(a)'s ‘short and
plain statement' requirement, but rather a supplement to
it.” Baker v. Gurfein, 744 F.Supp.2d 311, 315
(D.D.C. 2010) (Walton, J.) (citing Williams, 389
F.3d at 1256). Accordingly, in order to withstand a motion to
dismiss for failure to plead a False Claims Act claim with
the degree of particularity required by Rule 9(b), a
“complaint must . . . provide a defendant with notice
of the who, what, when, where, and how with respect to the
circumstances of the fraud.” Stevens v. InPhonic,
Inc., 662 F.Supp.2d 105, 114 (D.D.C. 2009) (Walton, J.)
(internal quotation marks and citations omitted)).