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United States ex rel. Groat v. Boston Heart Diagnostics Corp.

United States District Court, District of Columbia

December 11, 2017

UNITED STATES OF AMERICA, et al., ex rel. TINA D. GROAT, Plaintiffs,
v.
BOSTON HEART DIAGNOSTICS CORPORATION, Defendant.

          MEMORANDUM OPINION

          REGGIE B. WALTON UNITED STATES DISTRICT JUDGE.

         The plaintiff/relator, Tina D. Groat, M.D., initiated this qui tam 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. On June 9, 2017, the Court granted in part and denied in part Boston Heart's motion to dismiss the relator's complaint. See United States ex rel. Groat v. Boston Heart Diagnostics Corp., 255 F.Supp.3d 13, 17, 32-33 (D.D.C. 2017) (Walton, J.). Currently before the Court is Boston Heart Diagnostics Corporation's Motion for Reconsideration of the Court's Order on the Motion to Dismiss (“Def.'s Mot.”). Upon careful consideration of the parties' submissions, [1] the Court concludes that it must grant in part and deny in part Boston Heart's motion for reconsideration.

         I. BACKGROUND

         The Court discussed the factual background and statutory authority pertinent to this case in its Memorandum Opinion issued on June 9, 2017, see Groat, 255 F.Supp.3d at 17-20, and will not reiterate those facts and authorities again here. In that opinion, the Court declined to dismiss the relator's presentment claim under § 3729(a)(1)(A) and false statements claim under § 3729(a)(1)(B), as well as her analog presentment and false statements claims under various state false claims act statutes, but dismissed her “reverse false claims” under § 3729(a)(1)(G) and the analog state statutes. See id. at 30-33. On June 23, 2017, Boston Heart filed its present motion, requesting that the Court reconsider its conclusion “that Boston Heart has an obligation to establish that the tests for which it seeks government reimbursement are medically necessary, ” id. at 25, which “underlies [the Court's] conclusions with respect to both falsity and knowledge as to [the r]elator's presentment . . . [and] false statements allegations, ” Def.'s Mot. at 9 (internal citations omitted).

         II. STANDARD OF REVIEW

         Under Federal Rule of Civil Procedure 54(b), any order or decision that does not constitute a final judgment “may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.” Fed.R.Civ.P. 54(b). Although “district court[s] ha[ve] ‘broad discretion to hear a motion for reconsideration brought under Rule 54(b), '” Univ. of Colo. Health at Mem'l Hosp. v. Burwell, 164 F.Supp.3d 56, 62 (D.D.C. 2016) (quoting Isse v. Am. Univ., 544 F.Supp.2d 25, 29 (D.D.C. 2008)), district courts grant motions for reconsideration of interlocutory orders only “as justice requires, ” Capitol Sprinkler Inspection, Inc. v. Guest Servs., Inc., 630 F.3d 217, 227 (D.C. Cir. 2011) (quoting Greene v. Union Mut. Life Ins. Co. of Am., 764 F.2d 19, 22-23 (1st Cir. 1985)).

         In deciding whether “justice requires” reversal of a prior interlocutory order, courts assess circumstances such as “whether the court ‘patently' misunderstood the parties, made a decision beyond the adversarial issues presented, made an error in failing to consider controlling decisions or data, or whether a controlling or significant change in the law has occurred.” In Defense of Animals v. Nat'l Insts. of Health, 543 F.Supp.2d 70, 75 (D.D.C. 2008) (quoting Singh v. George Wash. Univ., 383 F.Supp.2d 99, 101 (D.D.C. 2005)); see also Davis v. Joseph J. Magnolia, Inc., 893 F.Supp.2d 165, 168 (D.D.C. 2012) (“[A] motion for reconsideration is discretionary and should not be granted unless the movant presents either newly discovered evidence or errors of law or fact that need correction.”). “The burden is on the moving party to show that reconsideration is appropriate and that harm or injustice would result if reconsideration were denied.” United States ex rel. Westrick v. Second Chance Body Armor, Inc., 893 F.Supp.2d 258, 268 (D.D.C. 2012) (citing Husayn v. Gates, 588 F.Supp.2d 7, 10 (D.D.C. 2008)). And, motions for reconsideration are not vehicles for either reasserting arguments previously raised and rejected by the court or presenting arguments that should have been raised previously with the court. See Estate of Gaither ex rel. Gaither v. District of Columbia, 771 F.Supp.2d 5, 10 & n.4 (D.D.C. 2011).

         III. ANALYSIS

         Boston Heart urges the Court to reconsider its conclusion “that Boston Heart has an obligation to establish that the tests for which it seeks government reimbursement are medically necessary, ” Groat, 255 F.Supp.3d at 25, for three reasons, see Def.'s Mot. at 1-2. The Court agrees that this conclusion warrants correction to clarify that a laboratory may rely on the ordering physician's determination of medical necessity in the laboratory's certification to HHS on the CMS-1500 form. Nonetheless, the Court concludes that despite its correction of the medical necessity ruling, its denial of Boston Heart's motion to dismiss the relator's federal and state presentment and false statements claims was proper.

         A. The Court's Conclusion Regarding Laboratories' Obligations with Respect to Medical Necessity

         1. HHS Compliance Program Guidance for Clinical Laboratories

         First, Boston Heart argues that the Court's prior medical necessity conclusion “conflicts directly with the longstanding position of the Office of the Inspector General for the Department of Health and Human Services . . . that ‘laboratories do not and cannot treat patients or make medical necessity determinations.'” Id. at 1 (quoting Publication of OIG Compliance Program Guidance for Clinical Laboratories (“OIG Guidance”), 63 Fed. Reg. 45, 076, 45, 079 (Aug. 24, 1998)); see also id. at 3-5 (discussing the OIG guidance). The relator argues in response that the OIG Guidance “firmly establishes a lab[oratory]'s duty to only submit claims for medically necessary tests and directly aligns with the CMS Form 1500 requirement for [a] ‘physician or supplier' to certify” the medical necessity of each test ordered. Relator's Opp'n at 6. Although the Court agrees with the relator that a laboratory has a “legal duty to ensure that it is not submitting false or incorrect claims to Government . . . payors, ” OIG Guidance, 63 Fed. Reg. at 45, 077, it concludes for the reasons set forth below that a laboratory cannot and is not required to determine medical necessity, but rather is permitted to rely on the ordering physician's determination that the laboratory tests billed to Medicare are medically necessary.

         The OIG Guidance was issued “to refine and build on the original model guidance plan for clinical laboratories, ” which was published in 1997 as part of an effort “to engage the private health care community in combating fraud and abuse.” OIG Guidance, 63 Fed. Reg. At 45, 076. This supplemental guidance was “intended to assist clinical laboratories in developing effective internal controls that promote adherence to applicable . . . law[s, ] . . . [and to] advance the prevention of fraud, abuse, and waste in the clinical laboratory industry.” Id. at 45, 077. The OIG Guidance identifies for laboratories “specific areas of potential fraud, ” including, as relevant to this case, “marketing schemes, [ ] coding issues, . . . and improper claims submission.” Id. at 45, 078.

         The OIG Guidance section devoted to “Medical Necessity” states, among other things, that

[l]aboratory compliance programs, to be effective, should communicate to physicians that claims submitted for services will only be paid if the service is covered, reasonable, and necessary for the beneficiary, given his or her clinical condition. Laboratories should take all reasonable steps to ensure that [they are] not submitting claims for services that are not covered, reasonable and necessary. Upon request, a laboratory should be able to produce or obtain from the treating physician . . . the documentation to support the medical necessity of the service the laboratory has provided and billed to a Federal . . . health care program. We recognize that laboratories do not and cannot treat patients or make medical necessity determinations. However, there are steps that such facilities can take to assure compliance with the applicable statutes, regulations and the requirements of Federal . . . health plans.

Id. at 45, 079 (footnote omitted).

         The OIG Guidance recommends various processes a laboratory can implement to ensure that laboratories do not submit claims for unnecessary tests. For example, the OIG Guidance encourages a laboratory to construct [its] requisition form to

capture the correct program information as required by Federal . . . health care programs and to promote the conscious ordering of tests by physicians . . . . The laboratory should construct the requisition form to ensure that the physician . . . has made an independent medical necessity decision with regard to each test the laboratory will bill. Laboratories should encourage physicians . . . to submit diagnosis information for all tests ordered, as documentation of the medical necessity of ...

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