The district court dismissed the relator’s qui tam claims for failure to plead with particularity under Rule 9(b). The district court explained the allegations did not specify which doctors were overpaid for their referrals, how or when oncologists received bonuses based on drug administration, how the health system defendant paid the physician group based on referrals, or which Medicare claims were tainted because of improper referrals or kickbacks for drug administration. The allegations also did not directly connect the compensation strategies with the number of referrals. Although the relator provided an over 300-page list of Medicare claims, the list was missing key details, such as whether the patients were referred to the health system, who billed Medicare for the claims, or whether the Medicare claim was for a drug attached to an improper kickback, and therefore the relator did not sufficiently allege a false claim was submitted. In U.S. ex rel. Dr. Kuo Chao v. Medtronic PLC , the relator, a neuroradiologist, alleged that the Medtronic defendants violated the AKS and the FCA by aggressively promoting Pipeline, a Medtronic medical device used for aneurysms. The Medtronic defendants allegedly provided kickbacks to physicians in the form of proctoring fees, mini-vacations at lavish resorts and paid travel expenses without travel occurring. Additional kickbacks to the physicians allegedly included investments in side businesses, excessive payments for data collection, funding awards to hospitals and doctors through grants and fellowships, prominent research roles and hiring doctor-owned companies to work on the defendants’ studies. 212 In granting the defendants’ motion to dismiss, the district court found the relator failed to sufficiently plead each of its AKS claims. The complaint made only generalized allegations of overpayments and legal conclusions without providing factual information on the FMV of payments to physicians or a description of doctors being paid for work not performed or travel never taken. The complaint also failed to provide specific information regarding the medical necessity of the doctors’ services, instances in which the defendants reduced funding for providers who decreased their usage of Pipeline or details on why the physicians’ purchases were inappropriate. OTHER INDUCEMENTS In U.S. ex rel. Watt v. VirtuOx, Inc. , the relator alleged four schemes against VirtuOx, an at-home oxygen testing company. Specifically, the relator alleged that VirtuOx: (1) misidentified San Francisco, California as its location for billing claims rather than Coral Springs, Florida (to increase reimbursements); (2) billed for unnecessary or redundant “spot check” oximetry testing; (3) unlawfully promoted a non-FDA device; and (4) used kickbacks to induce durable medical equipment (DME) companies to refer data interpretation work to it. The district court rejected each of these allegations, granting the defendant’s motion to dismiss. In reaching that conclusion, the district court noted, “while [the relator] has set forth facts showing that VirtuOx has violated Medicare guidance, as well as offered and provided incentives in exchange for referrals of service, [the relator] has failed to nudge her False Claims Act ‘claims across the line from conceivable to plausible.’” 213
The district court explained the relator adequately described VirtuOx’s providing something of value (free or deeply discounted pulse oximeters) to at least one DME company in exchange for that company’s referral of diagnostic services for VirtuOx. The district court found the relator also sufficiently alleged VirtuOx submitted claims to Medicare for performing that kind of diagnostic service for hundreds of thousands of patients over the relevant years. The district court concluded, however, that the relator failed to allege any fact connecting the two, stating “there is nothing from which the Court could infer that any of VirtuOx’s Medicare claims actually arose out of the kickback scheme.”
212 2021 WL 4816647 (C.D. Cal. Apr. 12, 2021). 213 2021 WL 3883944 (S.D. Fla. Aug. 31, 2021).
STARK LAW/ANTI-KICKBACK STATUTE BASS, BERRY & SIMS | 37
Powered by FlippingBook