Godecke ex rel. United States v. Kinetic Concepts, Inc.

Opinion

 [*1205]  TASHIMA, Circuit Judge:

Relator Geraldine Godecke appeals the district court's dismissal of her qui tam case against Defendants Kinetic Concepts, Inc. and KCI USA, Inc. (collectively, "KCI"), brought under the federal False Claims Act ("FCA"). Godecke alleges that KCI submitted false claims to Medicare. Specifically, Godecke alleges that KCI delivered durable medical equipment to Medicare patients before obtaining a detailed written order from a physician, which was a requirement for Medicare reimbursement. She alleges that if Medicare knew that this delivery requirement had not been satisfied prior to delivery, Medicare's policy would have been to refuse payment on KCI's claims. She alleges that KCI knew that it should [**3]  not have been able to receive payment, but sought reimbursement regardless of this fact and chose not to alert Medicare to the issue. On this appeal, we must determine whether Godecke sufficiently alleges that (1) KCI submitted false claims, (2) KCI acted with scienter, and (3) the false claims were material to the government. We hold that she does so. Therefore, we reverse and remand for further proceedings.

BACKGROUND

The facts as presented here are taken from the allegations in the Fourth Amended Complaint ("FAC"). ] For the purposes of a motion to dismiss, we must take all of the factual allegations in the complaint as true, although we are not bound to accept as true a legal conclusion couched as a factual allegation. Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007).³

In 2001, Godecke became an employee of MedClaim, Inc., a specialized billing company that was under contract with KCI to submit KCI's claims to Medicare and to provide evidentiary and other support for appeals of claims denied by Medicare. In 2003, KCI purchased MedClaim, and Godecke became an employee of KCI. She was the Director of Medicare Cash and Collections at MedClaim and then KCI from June 1, 2001 to October 1, 2007. Her position required her to work with [**4]  KCI's information systems related to billing, and also required her to review communications regarding claim payments that were made or denied by Medicare. She was also responsible for the creation of a new department within KCI, informally known as the "back end" of the billing department, that dealt specifically with the  [*1206]  appeal process for KCI's claims that had been denied by the Medicare billing and payment system. She and her staff evaluated whether KCI should appeal those denials and provided supporting information for challenging those denials in administrative hearings.

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