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The False Claims Act (FCA) and the Illinois Whistleblower Reward and Protection Act (IWRPA) make it unlawful to knowingly (1) present or cause to be presented to the United States government a false or fraudulent claim for payment, 31 U.S.C.S. § 3729(a)(1) (1994); 740 ILCS 175/3(a)(1)(A), or (2) make or use or cause to be made or used a false record or statement material to a false or fraudulent claim paid or approved by the United States government, 31 U.S.C.S. § 3729(a)(1)(B); 740 ILCS 175/3(a)(1)(B). Under the FCA, private individuals, referred to as relators, may file civil actions known as qui tam actions on behalf of the United States. To establish civil liability under the False Claims Act, a relator generally must prove (1) that the defendant made a statement in order to receive money from the government; (2) that the statement was false; and (3) that the defendant knew the statement was false. Analysis of FCA claims applies equally to claims under the IWRPA. The FCA is an anti-fraud statute, and claims brought pursuant to the FCA are subject to the heightened pleading requirements of Fed. R. Civ. P. 9(b).
Rush University Medical Center ("RUMC") is a teaching hospital that provides medical care to Medicare and Medicaid beneficiaries. As a teaching hospital, Rush receives compensation from the United States government for the use of its facilities for teaching and for expenses associated with the training of residents. These teaching and training costs are paid by the government to Rush pursuant to Medicare Part A Graduate Medical Expense payments. Payments to Rush under Medicare Part A cover residents' salaries and reimbursement for the teaching activities of attending physicians when the attending physicians act in an indirect supervisory role. Teaching physicians who themselves directly provide patient care while involving residents in patient care are reimbursed under Medicare Part B. In the context of surgeries, reimbursement under Medicare Part B requires that the teaching physician is physically present during all "key and critical" portions of the surgical procedure and is otherwise "immediately available" for the entire surgical procedure—not involved in another procedure from which he or she cannot return. The Medicare Rules and Regulations instruct that when surgeries overlap, the teaching physician, in addition to being physically present during the key or critical portions of both operations, must "personally document in the medical record that he/she was physically present during the critical or key portion(s) of both procedures," and, if she will not be immediately available, she "must arrange for another qualified surgeon to immediately assist the resident in the other case should the need arise."
Robert S. Goldberg, M.D. and June Beecham (collectively, "Relators") alleged that between 1996 and 2004, Defendants submitted claims to Medicare that violated the Medicare Rules and Regulations by failing to follow the required procedures for overlapping surgeries. In support of their claims, Relators described several surgeries for which Medicare was allegedly billed that appear to violate the relevant Rules and Regulations. These include a surgery in which the billing doctor never entered the operating room; six complex surgeries scheduled to be performed by the same surgeon in two separate operating rooms over the course of a day; a surgery in which the resident performed the procedure in its entirety; five surgeries to be performed by the same surgeon scheduled in three different operating rooms, in different buildings, in a three-hour time span; and the viewing of an arthroscopic procedure by the teaching physician through a monitor in another operating room. Relators also alleged that one of the MOR surgeons, Dr. Cole, had been instructed by the Executive Committee of SurgiCenter to discontinue his practice of directing residents to conduct surgeries unsupervised. Despite these instructions, Dr. Cole continued this practice in violation of the Medicare Rules and Regulations. Relators further alleged that Doctor Defendants' regular practice was to conduct simultaneous surgeries in two or more operating rooms on each day they were operating without arranging for a back-up physician to be immediately available when they were involved in overlapping surgeries. According to Relators, it was the practice of the orthopedic residents to lie in the medical records and state that MOR doctors were present for all key and critical portions of the surgery and that the scheduled surgeon was "immediately available" at all times. Additionally, the Rush orthopedic nurses facilitated and covered up the simultaneous surgeries by failing and refusing to note the times at which Doctor Defendants entered and exited their surgeries, even after they were instructed by their supervisors to do so. Relators also alleged that the MOR doctors were motivated to increase the number of surgeries they performed to justify millions of dollars in kickbacks from Zimmer, a manufacturer and developer of surgical hip and knee implants. Relators claimed that Rush knew the surgeries being billed by MOR doctors were not being properly supervised, but they allowed and assisted the scheduling of concurrent surgeries and obtained reimbursement from the government for surgeries that they knew did not comply with the Medicare Rules and Regulations. Relators also alleged that Defendants conspired to fraudulently bill Medicaid and Medicare in order to receive additional federal funds, benefit from kickback programs, and reap the financial and reputational benefits accrued by such a high volume of surgeries.
Thus, Relators brought this qui tam action under the provisions of the False Claims Act ("FCA" or "the Act"), 31 U.S.C. § 3729 et seq., and the Illinois Whistleblower Reward and Protection Act ("IWRPA"), 740 Ill. Comp. Stat. 175/1 et seq., in the name of the United States of America and the State of Illinois.
Did the Relators’ Complaint sufficiently state a claim under the FCA and the IWRPA against Rush?
The closest Relators came to stating a claim against Rush under the FCA was their allegation that "[i]t was the job of Rush orthopedic nurses to facilitate the Doctor Defendants' practice of conducting surgeries simultaneously in two operating rooms." Even if this allegation imported any vicarious liability to Rush, however, Relators went on to negate Rush's control by alleging that "[e]ven when the Rush nurses who worked with the Doctor Defendants were instructed by their supervisors to record teaching physician times in and out of their surgeries, they refused to do so." Additionally, Relators did not allege that Rush submitted any false claims to the government. Relators' allegations were based upon the Medicare Part B requirements for the reimbursement of teaching physicians, while RUMC and SurgiCenter, as hospitals, were reimbursed for the use of their facilities under Medicare Part A. The Complaint adequately alleged that MOR and Doctor Defendants knowingly violated the Medicare Rules and Regulations requiring teaching physicians to be immediately available during surgeries and that they submitted claims for reimbursement as though they had complied with the Medicare Rules. The Complaint failed to allege any fraudulent claims submitted by Rush or under Medicare Part A, or any requirements for reimbursement under Medicare Part A that Rush knowingly failed to meet. Permitting Doctors to schedule concurrent surgeries was not grounds for a cause of action under the Act.