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Are All ‘Medical Necessity’ Determinations Subject to False Claims Act Liability? Opinions May Differ.

Two federal appellate-court decisions handed down in the past few weeks have generated much speculation about whether “medical necessity” determinations underlying Medicare or Medicaid claims can now be considered “objectively false” — despite conflicting medical-expert opinions — and actionable under the False Claims Act (FCA). The most recent opinion was issued on July 9, 2018, in United States ex rel. Polukoff v. St. Mark’s Hospital (“Polukoff”).  Polukoff involved two cardiac surgical procedures reimbursed by Medicare, each of which involved the closing of a hole between the two upper chambers of the heart.  In reversing the District Court below, the Tenth Circuit Court of Appeals in Polukoff, reading the FCA “broadly,” concluded that the procedures, challenged as medically unnecessary, can form the basis for FCA liability.  Similarly, on June 25, 2018, the Sixth Circuit Court of Appeals, in United States of America v. Paulus, sustained a jury verdict in a criminal action against a cardiologist for health care fraud and making false statements, for having billed Medicare also for allegedly medically unnecessary procedures — implanting stents — based on angiograms showing some blockage of patients’ coronary arteries.

The opinions in Polukoff and Paulus came down just as the Eleventh Circuit Court of Appeals is considering the appeal in United States of America v. GGNSC Admin. Servs., known as the AseraCare case.  AseraCare involved FCA claims for hospice care based on allegedly false certifications, completed by physicians, that the hospice patients had a life expectancy of six months or less.  In granting summary judgment dismissing the lawsuit, the District Court opined: “If the Court were to find that all the Government needed to prove falsity in a hospice provider case was one medical expert who reviewed the medical records and disagreed with the certifying physician, hospice providers would be subject to potential FCA liability any time the Government could find a medical expert who disagreed with the certifying physician’s clinical judgment.”

Some have questioned whether the lower court’s holding in AseraCare can be sustained on appeal if the Eleventh Circuit were to follow the precedents in Polukoff and Poulus.  Such a reading of those decisions, however, may be too broad-brush, by essentially treating all medical necessity determinations alike, for purposes of FCA liability, and equally vulnerable to challenge as “objectively false.” There are critical differences between the cardiology surgical procedures at issue in Polukoff and Poulus, on the one hand, and the certifications of hospice eligibility in AseraCare, on the other hand.  The latter each rest not only on a medical diagnosis, but on a physician’s prognostication that the patient will not live longer than six months.  Such a judgment is more inherently subjective in nature, requiring both a professional assessment of objective medical facts, concerning the patient’s diagnosis and condition, and a projection into the future of the likely course or progression of the underlying disease or condition.

Other “medical necessity” determinations, which call for forecasting the likely benefits of, for instance, rehabilitation therapy or other prescribed treatments over time, are similarly difficult to characterize as “objectively false” — without, of course, the benefit of hindsight.  Those types of medical judgments, in large part, involve making an educated guess, where medical experts can and often do differ, and can reach, in good faith, conflicting medical opinions.

© Copyright 2020 Cadwalader, Wickersham & Taft LLPNational Law Review, Volume VIII, Number 197



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