United States District Court, D. Maine
UNITED STATES OF AMERICA, ex rel. JENNIFER WORTHY, and in her own name solely regarding individual retaliation claims, Plaintiff/Relator,
EASTERN MAINE HEALTHCARE SYSTEMS, MERCY HEALTH SYSTEM OF MAINE, MERCY HOSPITAL d/b/a MERCY MEDICAL ASSOCIATES, CALIFORNIA HEALTHCARE MEDICAL BILLING, INC., and ACCRETIVE HEALTH, INC., Defendants.
ORDER ON MOTIONS TO DISMISS
A. WOODCOCK, JR. UNITED STATES DISTRICT JUDGE
Worthy claims that the Defendants violated the False Claims
Act by submitting false and fraudulent claims to the Medicare
program through unlawful billing practices. She also claims
that the Defendants retaliated against her in violation of
the False Claims Act and Maine Whistleblowers' Protection
Act because of her efforts to stop the unlawful billing
practices. Each of the Defendants moves to dismiss Counts I,
II, IV, and V of the complaint. The Court grants in part and
denies in part each of these motions. Specifically, the Court
grants California Healthcare Medical Billing's motion to
dismiss Count V, the retaliation count, in its entirety
because there is no factual allegation that will support the
conclusion that it was ever the Plaintiff's employer. The
Court also grants Mercy and Accretive's motion to dismiss
Count V, but only with respect to the Maine
Whistleblowers' Protection Act retaliation claim for
monetary damages and attorney's fees, based on the
parties' concession that the Plaintiff failed to file her
constructive discharge claim in a timely manner as required
by Maine law. The Court denies the motions with respect to
the remaining counts.
April 29, 2014, Jennifer Worthy filed a sealed qui tam
complaint under the False Claims Act (FCA), 31 U.S.C.
§§ 3729 et seq., for and on behalf of the
United States of America, and on her own behalf regarding her
§ 3730(h) retaliation claim, against Mercy Hospital,
Mercy Health System of Maine, Eastern Maine Healthcare
Systems (EMHS), California Healthcare Medical Billing, Inc.
(CHMB), and Accretive Health, Inc. (Accretive). Compl.
(Filed Under Seal); Demand for Jury Trial; and Req. for
Injunctive Relief (ECF No. 1). She amended her complaint
on August 14, 2014, again filing it under seal. First Am.
Compl. (Filed Under Seal); Demand for Jury Trial; and Req.
for Injunctive Relief (ECF No. 9). On January 12, 2015,
Ms. Worthy amended her complaint a second time and filed it
under seal. Second Am. Compl. (Filed Under Seal); Demand
for Jury Trial; and Req. for Injunctive Relief (ECF No.
21). On March 9, 2015, the United States declined to
intervene in the action. United States Notice of Election
to Decline Intervention (ECF No. 24). As a result, the
Court ordered that Ms. Worthy unseal the Second Amended
Complaint and serve it upon the Defendants. Order
(ECF No. 27). On January 21, 2016, with consent of all the
Defendants, Ms. Worthy amended her complaint for a third
time, adding a claim under the Maine Whistleblowers'
Protection Act (MWPA), 26 M.R.S. §§ 831 et seq.
Third Am. Compl.; Demand for Jury Trial; and Req. for
Injunctive Relief (ECF No. 58) (TAC).
refined by the Third Amended Complaint, Ms. Worthy is making
the following claims:
(1) Count I: FCA against all Defendants for presentation of
false claims in alleged violation of 31 U.S.C. §
(2) Count II: FCA against all Defendants for making or using
false record or statement to cause claim to be paid in
alleged violation of 31 U.S.C. § 3729(a)(1)(B);
(3) Count III: FCA against all Defendants for making or using
false record or statement to conceal, avoid, and/or decrease
obligation to repay money in alleged violation of 31 U.S.C.
(4) Count IV: FCA against all Defendants for engaging in a
conspiracy to defraud the Government in alleged violation of
31 U.S.C. § 3729(a)(1)(C); and
(5) Count V: Unlawful retaliation under the FCA, 31 U.S.C.
§ 3730(h) and under the MWPA, 26 M.R.S. §§
March 21, 2016, Mercy Hospital, Mercy Health System of Maine,
and EMHS (collectively, the Mercy Defendants) moved for
partial dismissal of the Third Amended Complaint. Mot. of
Defs. Mercy Hospital, Mercy Health System of Maine, and
Eastern Maine Healthcare Systems for Partial Dismissal
(ECF No. 66) (Mercy's Mot.). On the same day,
CHMB also moved to dismiss four of the five counts in the
Third Amended Complaint. California Healthcare Medical
Billing, Inc.'s Mot. to Dismiss (ECF No. 67)
(CHMB's Mot.). Accretive joined Mercy's
motion to dismiss Counts I, II, and IV, and separately moved
to dismiss Count V. Def. Accretive Health's Mot. to
Dismiss Count V and Joinder in Supp. of Mercy Defs.' Mot.
to Dismiss Counts I, II, and IV (ECF No. 68)
(Accretive's Mot.). Ms. Worthy objected to the
Defendants' motions on May 11, 2016. Relator's
Consolidated Obj. to Defs.' Mots. to Dismiss Third Am.
Compl. (ECF No. 82) (Pl.'s Opp'n). On
June 10, 2016, each of the Defendants replied. CHMB's
Rely Mem. in Supp. of Mot. to Dismiss (ECF No. 88)
(CHMB's Reply); Am. Reply of Defs.'
Mercy Hospital, Mercy Health System of Maine, and Eastern
Maine Healthcare Systems in Supp. of Their Mot. for Partial
Dismissal (ECF No. 89) (Mercy's Reply);
Def. Accretive Health's Reply in Supp. of its Mot. to
Dismiss Count V and Joinder in Supp. of Mercy Defs.' Mot.
to Dismiss Counts I, II, and IV (ECF No. 90)
10, 2016, Ms. Worthy filed a notice of supplemental authority
regarding the United States Supreme Court's opinion in
Green v. Brennan, 136 S.Ct. 1769 (2016).
Pl.'s Notice of Suppl. Authority (ECF No. 86).
On June 23, 2016, the Defendants also filed a notice of
supplemental authority, this one regarding the United States
Supreme Court's decision in Universal Health
Services, Inc. v. United States ex rel. Escobar, 136
S.Ct. 1989 (2016). Defs.' Notice of Suppl.
Authority (ECF No. 93). Ms. Worthy responded to the
notice on July 5, 2016. Pl.-Relator's Resp. to
Defs.' Notice of Suppl. Authority (ECF No. 94).
August 4, 2016, Ms. Worthy, with the consent of the
Defendants, moved for oral argument on the motions to
dismiss. Pl.'s Consent Mot. for Oral Arg. on Mots. to
Dismiss (ECF No. 95). The Court granted the motion for
oral argument on the same day. Order (ECF No. 96).
On December 14, 2016, the Defendants filed a second notice of
supplemental authority concerning the First Circuit's
decisions in United States ex rel. Escobar v. Universal
Health Services, Inc., 842 F.3d 103 (1st Cir. 2016) and
Lawton ex rel. United States v. Takeda Pharmaceutical
Company, Ltd., 842 F.3d 125 (1st Cir. 2016).
Defs.' Second Notice of Suppl. Authority (ECF
No. 103). Ms. Worthy responded on December 22, 2016.
Pl.-Relator's Resp. to Defs.' Second Notice of
Suppl. Authority (ECF No. 104). The Court held oral
argument on January 5, 2017. In response to a question by the
Court at oral argument, Ms. Worthy filed a second notice of
supplemental authority on January 9, 2017 and the Defendants
responded on January 12, 2017. Pl.-Relator's Notice
of Suppl. Authority (ECF No. 106); Defs.' Resp.
to Pl.-Relator's Notice of Suppl. Authority (ECF No.
Jennifer Worthy is a resident of Cumberland County in Maine
and was employed by Mercy Hospital at its Portland location
from November 2, 2012 until February 21, 2014. TAC
¶ 9. Ms. Worthy began working at Mercy Hospital as a
supervisor of patient accounts and was promoted to the
position of manager of patient accounts in August 2013.
Id. ¶¶ 10-11. Before working for Mercy
Hospital, Ms. Worthy had worked for several medical practices
as a billing manager for a total of about eleven years.
Id. ¶ 12. She became a Certified Professional
Coder in 2006 after passing a six-hour test and completing 1,
600 hours of formal classroom training and two years of
on-the-job training. Id. ¶¶ 13-14.
EMHS is a Maine nonprofit, tax-exempt corporation.
Id. ¶ 23. Effective October 2, 2013, EMHS
acquired Mercy Health System of Maine, a Maine nonprofit,
tax-exempt corporation, which included Mercy Hospital, a
non-profit, tax-exempt hospital in Portland, Maine.
Id. Mercy Hospital wholly operates numerous
physician practices under the name Mercy Medical Associates
and provides inpatient and outpatient care in the greater
Portland area. Id. As a result of this acquisition,
Mercy Hospital ultimately became responsible for billing for
services provided by the physician practices of Mercy Medical
Associates. Id. ¶ 24.
CHMB is a California corporation with its principal place of
business in Escondido, California. Id. ¶ 19. It
provides billing services to medical providers and hospitals,
including Mercy Hospital. Id.
Accretive is a Delaware corporation with its principal place
of business in Chicago, Illinois. Id. ¶ 15. It
provides hospital and other medical providers, including
Mercy Hospital, with billing and debt collection services and
other revenue management services. Id.
is a Government program primarily benefiting the elderly
created by Congress in 1965. Id. ¶ 37. Medicare
is administered by the Centers for Medicare and Medicaid
Services (CMS), a federal agency that sets standards and
regulations for participation in the program. Id.
Medicare Part A primarily covers medical care for patients
admitted to the hospital and Medicare Part B primarily covers
doctor visits and medical care provided on an outpatient
basis. Id. The Government, through its Medicare
program, is one of the principal payers for medical services
rendered by Mercy Hospital. Id. ¶ 36.
Medicare program works by reimbursing health care providers
for the cost of services and ancillary items at fixed rates.
Id. ¶ 38. Reimbursements are made out of the
Medicare Trust Fund, which is supposed to reimburse only for
those services that were actually performed, were medically
necessary for the health of the patient, and were ordered
specifically by a physician using appropriate medical
judgment and acting in the best interest of the patient.
Id. CMS requires healthcare providers to certify
that they complied with all laws and regulations.
Id. ¶ 39. The Medicare Trust Fund relies on the
implied representation of suppliers of Medicare services that
the services billed are compensable under Medicare.
Id. ¶ 38.
sixty-five page Third Amended Complaint, Ms. Worthy provides
background information about the billing and claims
submission process at Mercy Hospital. She then sets forth
facts alleging several different fraudulent schemes to
support her claims in Counts I-IV that the Defendants
violated the FCA by submitting false claims and by conspiring
to commit that fraud. Additionally, Ms. Worthy alleges facts
to support her claim in Count V that the Defendants
unlawfully retaliated against her. The alleged facts are
copious and dense and the Court has done its best to
summarize the allegations below.
Mercy's Billing and Claims Submission Processes
approximately April 2012, Mercy Hospital contracted with
Accretive to provide billing, collections, and revenue
management services to the Hospital. Id.
¶¶ 16, 70. Because Mercy Hospital was struggling
financially at the time, it contracted with Accretive with
the goals of decreasing the costs of its revenue cycle and
increasing its collections. Id. ¶¶ 17, 70.
As part of its agreement with Mercy Hospital, Accretive
agreed to be compensated for its services based on the
increase in the Hospital's collections, referred to as
“lift.” Id. ¶¶ 16, 70, 121.
Thus, both Accretive and Mercy Hospital received a direct
financial benefit from increases in the Hospital's
collections. Id. ¶¶ 70, 121.
employed an “infused management” structure
whereby it inserted senior Accretive employees to oversee and
manage Mercy Hospital's day-to-day billing and
collections operations, including Hospital billing personnel.
Id. ¶¶ 18, 71. Accretive also implemented
several proprietary web-based tools to increase Mercy
Hospital's collections, including its Yield Based Follow
Up tool (YBFU tool). Id. ¶¶ 17, 71. The
YBFU tool integrates with a hospital's billing system to
track the status and expected reimbursement of unpaid claims,
and to prioritize claims for follow-up by hospital billing
staff. Id. ¶ 72. Accretive represented that the
YBFU tool would both shorten the revenue cycle-that is, the
time in which Mercy Hospital was paid for claims that it
submitted to insurers-and increase Mercy Hospital's
about early 2013, Mercy Hospital also decided to contract
with CHMB to perform the billing services for the Hospital
and its wholly-owned and wholly-operated physician practices.
Id. ¶ 19. Under its contract with Mercy
Hospital, CHMB receives as compensation 3% of the gross
collections from Mercy Medical Associate's physician
practices. Id. ¶ 21. CHMB made frequent site
visits to Mercy Hospital and integrated its billing
operations into Mercy Hospital's patient accounts
department. Id. ¶ 22.
Claims Submission Process
Hospital used an electronic health records system (Meditech)
to document the services it provided to patients.
Id. ¶ 75. In order to bill Medicare for
services, Mercy Hospital's professional coders accessed
the electronic health record in Meditech, analyzed the
medical documentation associated with the services provided
to the patient, and assigned codes that reflected those
services as well as the diagnosis. Id. Once the
coder finished assigning codes based upon the medical
documentation, the codes were electronically routed to Mercy
Hospital's billing department. Id. ¶ 76.
Based upon the codes assigned by the coder, Mercy
Hospital's billers then formulated the bill, and
initiated the process by which a claim was electronically
submitted to Medicare. Id. Billers then
electronically submitted Medicare claims to a computer system
known as the Fiscal Intermediary Standard System (FISS), the
single standard Medicare Part A claims processing system used
to process Medicare claims related to medical care provided
by hospital and hospital based providers. Id. ¶
FISS system utilized a system of “edits” intended
to promote correct coding of claims submitted to Medicare and
to prevent inappropriate payment. Id. ¶ 78.
Claim edits work by using automated edits to compare
submitted Medicare claims to a defined set of criteria, in
order to identify irregularities and prevent inappropriate
payment. Id. When irregularities are identified,
payment is stopped and the claim is returned to the provider
for review. Id. Coding changes, made in response to
edits, may then be made only if the clinical circumstances
justify the change in coding and not solely to bypass a
Medicare edit. Id.
False Modification and Resubmission of Claims That Had Been
Stopped by Medicare
it was integrated into Mercy Hospital's billing system in
February 2013, the YBFU tool tracked and compiled claims
submitted by Mercy for which Mercy had not received
compensation, including claims that had been stopped due to
the operation of Medicare edits, and ranked these claims
based on dollar amount, payer, and length of time the claim
had gone unpaid. Id. ¶ 79. The highest priority
Medicare claims-claims in excess of $25, 000 that were unpaid
after 21 days-were classified as Risk 1. Id. When
ranking unpaid claims, the YBFU tool did not differentiate
unpaid claims for which the Hospital was actually entitled to
compensation from those that involved non-payable charges.
Id. ¶ 80.
of limiting themselves to identifying and correcting claims
with legitimate errors, at daily huddles and during SWAT team
meetings, Accretive staff members, including Jessica Martin,
Brie Farmer, and Anvita Kumar, instructed Mercy Hospital
billers on how to manipulate claims that Medicare
legitimately held from payment by clearing Risk 1 claims in
order to get those claims paid. Id. ¶¶
81-84. The methods Accretive instructed Mercy billers to
employ included systematically (1) unbundling claims that
were required by Medicare payment rules to be bundled
together for single payment; and (2) deleting and otherwise
omitting accident and injury information in order to obtain
payment of claims which Medicare held from payment in
accordance with Medicare Secondary Payer (MSP) procedures.
Id. ¶ 67. Ms. Worthy contends that as a result
of these practices, Accretive and Mercy Hospital received
overpayments from Medicare, which the Defendants did not
report or return within the specified time period under the
regulations. Id. ¶ 69.
Unbundling Claims to Bypass Edits and Increase Payment
refers to the practice of billing separately for a group of
procedures that are covered by a single comprehensive billing
code. Id. ¶ 87. Intentional unbundling occurs
when providers manipulate billing codes in order to maximize
payment and otherwise bypass Medicare payment controls.
Id. CMS has long identified unbundling as a common
type of Medicare fraud. Id. ¶¶ 63, 87.
Accretive instructed government team billers to unbundle
claims in two primary ways: (a) through the false addition of
-59 modifiers and (b) through the false addition of G0
condition codes. Id. ¶ 88.
False Addition of -59 Modifiers
requires that certain services, when performed together on
the same individual, be bundled into one comprehensive charge
rather than charged and paid separately. Id. ¶
58. The payment for the bundled code includes payment for the
individual services included within the Current Procedural
Technology (CPT) code. Id. Under certain
circumstances, a provider may need to indicate that a
procedure or service was separate or distinct from other
services performed on the same day. Id. ¶¶
60, 90. Modifier -59 is appended to a bundled CPT code to
identify procedures or services that are normally bundled,
but are correctly being billed as separate services in that
instance. Id. ¶¶ 60, 91. Modifier -59 may
be appended to a lesser-included procedure or service if the
service represented a different patient encounter or session,
different procedure or surgery, different site or organ
system, separate incision/excision, separate lesion, or a
separate injury not ordinarily encountered or performed on
the same day by the same physician. Id. ¶¶
61, 91. Clinical documentation must support the use of the
Modifier -59 and this modifier should never be used strictly
to prevent a service from being bundled or to deceive the
Medicare claims processing system. Id. ¶¶
personnel, acting with the authority of Mercy management,
instructed Mercy's billers to bypass Medicare's edits
by systematically retracting claims and adding -59 modifiers
without a lawful basis to do so and without reference to
clinical documentation. Id. ¶ 93. By
instructing billers to regularly add the -59 modifier to
claims without a legitimate basis to do so, Accretive caused
claims to be submitted for multiple separate services that
were legally required to be paid at a lower, bundled rate and
that otherwise would have been paid at the lower rate.
Id. Ms. Worthy repeatedly witnessed and objected
when Accretive Revenue Cycle Analyst Jessica Martin ordered
the use of a -59 modifier without a legitimate basis and
solely to cause Medicare to pay more than it should.
Id. ¶ 94.
False Addition of G0 Condition Codes
report condition code G0 when a patient has multiple medical
visits on the same day at the same revenue center, but the
visits are for distinct, unrelated medical conditions.
Id. ¶¶ 56, 95. The G0 code bypasses
Medicare's audit system and certifies that the billed
services are unrelated, separate services eligible to be paid
separately and not as part of a packaged payment.
Id. ¶¶ 57, 95.
and Mercy Hospital falsely reported the G0 condition code for
related claims to bypass Medicare edits, resulting in
Medicare payment of duplicate facility fees for related
medical conditions that should have been bundled together.
Id. ¶ 96. As a result of the addition of false
G0 codes, Medicare paid more for individual claims than it
was legally required to pay. Id.
Deleting Accident and Injury Information from Claims Billed
to Medicare in Violation of the MSP Provision
provisions provide that, under certain conditions, Medicare
will be the secondary rather than primary payer for its
beneficiaries. Id. ¶ 64. Under the MSP
provisions, Medicare is precluded from making payment for
services to the extent that payment has been made or can
reasonably be expected to be made promptly under (1)
worker's compensation, (2) liability insurance, or (3)
no-fault insurance. Id. ¶¶ 64, 98. To
participate in the Medicare program, providers must agree to
bill other primary insurers before billing Medicare.
Id. ¶ 65. A provider is only permitted to seek
conditional payment from Medicare if it first billed the
claim to the worker's compensation, liability, or
no-fault insurer and it either did not receive payment at the
end of the 120-day prompt period or has evidence that payment
will not be made by the primary insurer within the 120-day
prompt period. Id. ¶ 99. Medicare regularly
withholds payments on accident or injury claims in order to
determine whether there exists a primary insurer other than
Medicare. Id. ¶ 100.
exist several means by which a claim may indicate to Medicare
that an accident or injury occurred, thereby triggering
Medicare's withholding of payment pending an inquiry and
determination of primary insurance. Id. ¶ 101.
One such method is inclusion on the claim of an external
cause of injury code (E code), an ICD-9 diagnosis code that
describes the cause of an injury, incident, or illness.
Id. Other methods include completion of specific
line items-10a, 10b, and 10c-on the CMS-1500 claim form to
indicate that the patient's condition was employment or
accident related. Id.
bypass the internal controls in Medicare's MSP
determination process so that Medicare would believe itself
to be the primary insurer, Accretive employees instructed and
pressured Mercy Hospital government team billers to retract
and remove accident and injury information, including E
codes-information which had previously been assigned to
claims by coders based upon review of clinical
documentation-from Risk 1 claims in FISS, without regard to
whether another payer was responsible for paying the claim.
Id. ¶ 104. Additionally, to accelerate payment
of Risk 1 claims billed to a worker's compensation,
liability, or no-fault insurer which had not been paid within
the expected YBFU time frame, Accretive instructed Hospital
billers to create new claims without any accident or injury
information- without E codes and with the answers to boxes
10a, 10b, and 10c of the CMS-1500 form switched from
“yes” to “no”-and to bill these
claims to Medicare rather than wait and conditionally bill
Medicare at the end of the 120-day prompt period.
Id. ¶ 105. For instance, in spring 2013, Ms.
Worthy reviewed copies of unpaid Risk 1 claims that Accretive
staff instructed a Mercy biller (AW) to submit to Medicare
without accident or injury information in order to get the
claim through the Medicare system. Id. ¶ 107.
In this way, Defendants were able to improperly receive
payment from Medicare on claims Medicare was not obligated to
pay. Id. ¶ 106.
Worthy Observed and Reported Submission of False Diagnosis
& Billing Codes
this time, members of Mercy's billing staff began raising
concerns about Accretive's practices. Id. ¶
111. These billers informed Ms. Worthy of the pressure that
the billing staff-particularly, the government team
billers-received from Accretive every day to manipulate
coding and clear high-value Medicare claims. Id. Ms.
Worthy's personal observations heightened her concerns
about the submission of false claims; specifically, she
witnessed Accretive staff pressuring and directing government
team billers to resubmit Medicare claims within FISS without
accessing underlying clinical documentation or communicating
with coders to ensure that changes were clinically warranted.
Id. ¶ 112. This was evidenced not only in
routine meetings between Accretive and billing staff, but
also when Accretive managers stood at the cubicles of
government team billers and gave specific instructions on how
to modify the claims. Id. On more than one occasion,
Ms. Worthy overheard Jessica Martin of Accretive instruct a
government team biller to add -59 modifiers to unbundled
procedures to bypass Medicare edits. Id. ¶ 113.
Worthy's concerns were corroborated by her review of
specific Medicare claims, and the patterns of changes she
observed to unpaid Medicare claims in FISS, all of which
confirmed what she had personally observed and what had been
relayed to her by the billing staff. Id. ¶ 114.
Specifically, in the fall of 2013, after recognizing a
drastic increase in the number of claims that had been
suspended or returned by Medicare, Ms. Worthy began receiving
reports that listed FISS claims, sorted by the reason that
the claim had been returned by Medicare. Id. ¶
115. In reviewing these reports, Ms. Worthy, along with
another Mercy biller (TH), were able to identify patterns of
changes made to high-value claims in FISS by members of Mercy
Hospital's government team, including the deletion of
E-codes and the addition of G0 codes and -59 modifiers.
Id. ¶ 116. The frequency of these changes
substantially exceeded what Ms. Worthy and TH expected, based
upon their experience, and these changes were particularly
concerning given that the billing staff no longer maintained
access to clinical coding information. Id.
addition, Ms. Worthy reviewed specific Medicare claims that
had been returned for failing edits, changed in the FISS
system at the direction of Accretive, and subsequently paid
by Medicare. Id. ¶ 117. This was accomplished
by identifying high-value claims that Medicare had returned
or suspended based upon the fiscal intermediary's
internal controls; examining the electronic claim in FISS to
determine what changes were made to the coding after the
claim had been returned; comparing the coding changes to the
documentation in the Meditech system; and subsequently,
determining whether the changed claim had been paid by
Medicare. Id. In numerous instances, the final FISS
claim was no longer consistent with the billing information
contained in Meditech. Id. For example, in
approximately December 2013, Ms. Worthy observed information
provided by TH that revealed a pattern of questionable coding
changes made in the FISS system by DD, a member of the
government billing team. Id. ¶ 118. These
changes included the systematic deletion of E codes from
potential MSP claims. Id. Ms. Worthy questioned DD
regarding the coding changes he made in FISS; DD responded
that the changes were made at the direction of Accretive
Worthy reported her concerns to Mercy Hospital Coding Manager
Shonda Menezes and Accretive Director of Revenue Cycle Judi
Kieltyka. Id. ¶ 119. She also spoke with Brie
Farmer, Anvita Kumar, and Jessica Martin from Accretive and
voiced her concerns that the coding changes made at their
direction were false. Id. Nonetheless, Accretive and
Mercy Hospital continued to use the YBFU tool to identify
high-value, unpaid claims and then resubmit false codes for
high-dollar Risk 1 claims. Id. Ms. Worthy further
reported the deletion of accident and injury codes in a
meeting with Mercy Hospital Chief Medical Officer Scott Rusk,
Ms. Kieltyka, and Mercy Hospital Senior Vice President and
Chief Financial Officer Michael Hachey. Id. ¶
120. This meeting did not result in any changes. Id.
Accretive Instructed Staff to Falsify Patient Discharge
Status Indicators to Increase Reimbursement
pays for acute inpatient care in hospitals through the
Inpatient Prospective Payment System (IPPS). Id.
¶ 41. Hospitals receive a predetermined rate for each
discharge or each case, instead of billing Medicare for
individual services provided during the patient's
hospital stay. Id. The payment rate under the IPPS
is determined by the patient's principal diagnosis upon
discharge and any secondary diagnoses, comorbidities,
complications, procedures performed during the hospital stay,
and discharge status. Id. ¶ 42. Based on these
factors, a patient is assigned to a diagnosis-related group
(DRG). Id. Each discharge is assigned only one DRG,
regardless of the number of conditions treated or services
furnished during the patient's stay. Id. The
payment for each DRG is based on the expenses associated with
the patient's condition and treatment, and the
hospital's capital and operating costs. Id.
Medicare's IPPS, when a patient is discharged from the
hospital, the hospital indicates the patient's discharge
status to Medicare as part of its claim for reimbursement.
Id. ¶ 123. The discharge status indicates where
the patient is being discharged to, such as a skilled nursing
facility or the patient's home. Id. If a patient
is discharged from the hospital to a skilled nursing
facility, the hospital and the skilled nursing facility share
in the reimbursement. Id. By contrast, if a patient
is discharged to his or her home, the hospital gets the
entire reimbursement amount. Id. Therefore it is to
the hospital's financial advantage to have the discharge
status indicator be “discharge to home” because
the hospital's reimbursement amount from Medicare is
in 2012, Ms. Martin created a spreadsheet each quarter
listing Medicare claims that had been submitted with a
discharge status indicator other than “discharge to
home” and noting the difference in reimbursement for
Mercy Hospital if the listed claims had “discharge to
home” status indicators rather than their current
discharge status indicator. Id. ¶ 124. Ms.
Martin provided Ms. Worthy with the discharge indicator
spreadsheet every quarter from July 2013 until the end of her
employment in February 2014. Id. ¶ 125.
2013, Ms. Martin provided Ms. Worthy with the discharge
indicator spreadsheet for Q1 2013 and instructed her to enter
the FISS system, retract the claims, change the discharge
status indicator to “discharged to home” and
resubmit the claims so that Mercy Hospital would receive a
greater DRG payment. Id. ¶ 126. Ms. Martin
later provided Ms. Worthy with the discharge status indicator
spreadsheet from Q2 2013 with the same instructions.
Id. Because Accretive did not have its own access to
FISS, only a Mercy Hospital employee with access to FISS
could change the discharge status indicators on those claims.
Worthy was concerned about the appropriateness of this
practice and believed these changes should be made by Mercy
Hospital's coding department based on medical
documentation. Id. ¶ 127. However, when Ms.
Worthy sent the spreadsheet to Ms. Menezes of the coding
department and asked her why a professional coder was not
handling the discharge status indicator changes, Ms. Menezes
informed her that the coding department was not supposed to
make the changes based on Accretive's instructions.
Id. After speaking with Ms. Menezes, Ms. Worthy
investigated the electronic medical records in Meditech
associated with approximately seventy of the claims listed in
the Q1 and Q2 2013 spreadsheets she was provided, and found
that there was no documentation, such as an addendum or
telephone record, which supported changing the discharge
status indicator on the claims as Accretive demanded.
Id. ¶ 128. Ms. Worthy observed that the claims
listed on the spreadsheets were for high-value DRGs and that
each spreadsheet indicated that Mercy Hospital and Accretive
would receive an increase of approximately $100, 000 in
Medicare reimbursement by changing the discharge status
indicator on the claims. Id.
Worthy refused to falsify the discharge status indicators in
accordance with Accretive's instructions or to allow her
staff to do so. Id. ¶ 129. She also met with
Ms. Martin and Ms. Kieltyka of Accretive to express her
concerns about the practice. Id. Ms. Kieltyka and
Ms. Martin dismissed Ms. Worthy's objections, stating
that this was a “best practice” that Accretive
implemented at other client hospitals and that Mercy Hospital
would be “leaving money on the table” if she did
not do this. Id. Because Ms. Worthy refused to
falsify these claims in accordance with Accretive's
instructions, upon information and belief, after Ms.
Worthy's employment with Mercy Hospital ended, Mercy
Hospital biller TH changed and resubmitted the claims listed
on the Q1 and Q2 2013 spreadsheets with false discharge
status indicators based on the instructions of Ms. Martin and
Ms. Kieltyka. Id. ¶ 130. Upon information and
belief, under the direction of Ms. Martin and Ms. Kieltyka,
TH also changed the discharge status indicators of Medicare
claims listed on the Q3 2013, Q4 2013, and Q1 2014
Fraudulent or Duplicative Billing for Facility Fees Within
Three-Day and Same-Day Billing Windows
three-day payment window or “Three-Day Rule, ” is
designed to prevent multiple claims for facility fees when a
patient receives medical treatment at more than one facility
operated by the same hospital. Id. ¶ 47. Under
the Three-Day Rule, if a hospital or entity wholly operated
by a hospital provides outpatient services to a patient in
the three days prior to an inpatient hospital stay, the
technical component, which covers the cost of equipment and
supplies for a service, or facility fee for those services,
must be bundled with the claim for the inpatient stay and not
separately billed. Id. ¶ 48. Similarly, any
diagnostic services within the three-day window, and any
non-diagnostic services that are clinically related to the
reason for the patient's hospital admission, must be
bundled with the claim for the hospital stay. Id.
Medicare pays for outpatient care for beneficiaries through
its Outpatient Prospective Payment System (OPPS).
Id. ¶ 51. Under the OPPS, Medicare pays
predetermined amounts for designated services. Id.
Medicare classifies outpatient services into ambulatory
payment classifications (APCs). Id. ¶ 52. APCs
group procedures together that are clinically similar and use
a similar amount of resources so that comparable procedures
receive comparable reimbursement rates. Id. APC
payments include overhead and supplies, which cannot be
billed separately under OPPS. Id. ¶ 53. Items
and services that must be included as packaged cost items and
not billed separately from services include, but are not
limited to: use of operating room, procedure or treatment
room, recovery room, and observation services; medical
supplies including surgical supplies and equipment, certain
pharmaceuticals, surgical dressings, substitute skin products
and other products that aid wound healing; supplies and
equipment related to anesthesia or sedation; certain clinical
diagnostic tests; and durable medical equipment that is
implantable. Id. ¶ 54. When multiple claims for
certain outpatient services occur on the same day, Medicare
regulations require that these claims be packaged together
under the “Same-Day Rule” to avoid overpayment
for the fixed costs that are incorporated into the payment
for that APC. Id. ¶ 55.
Defendants' Scheme to Submit False Claims in Violation of
Same-Day and Three-Day Rules
about April 17, 2013, representatives from CHMB, including
its owner, Janet Boos, and its account executive for Mercy
Hospital, Michelle Pena, visited Mercy Hospital to discuss
billing procedures. Id. ¶ 134. The CHMB
representatives met with, among others, Accretive's Judi
Kieltyka, and Mercy's Michael Hachey, Vice President of
Physician Practices Judi Hawkes, Chief Information Officer
Craig Dreher, and Ms. Worthy. Id. During the April
visit, the CHMB representatives did not spend any time
reviewing claims processing or the process by which Mercy
Hospital reviewed claims and ensured their accuracy.
upon comments by the CHMB representatives during the April
2013 visit, Ms. Worthy became concerned that CHMB was
unfamiliar with the Three-Day and Same-Day Rules and began to
raise questions internally. Id. ¶ 135. The
Hospital executives assured her that CHMB had experience with
provider-based billing for Medicare and had several hospital
clients. Id. Ms. Worthy raised similar concerns at a
subsequent meeting on June 19, 2013, and again in an email to
representatives from CHMB, Accretive, and Mercy. Id.
¶¶ 136, 138. She received no response. Id.
August 1, 2013, Mercy Hospital used Meditech billing software
to process all of its hospital and physician billing, thereby
ensuring that all facility billing was bundled in a single
claim in compliance with Medicare's legal requirements.
Id. ¶ 140. When CHMB assumed responsibility for
the billing of claims for Mercy Hospital's wholly-owned
physician practices, it used a different software,
Allscripts, to process all physician-practice claims
including both facility fees and professional fees.
Id. Allscripts was not integrated with and did not
communicate with Meditech. Id. Because Allscripts
would miss all claims subject to the Same-Day and Three-Day
Rules, Defendants knew that CHMB needed to manually check all
physician practice claims for the date of service to ensure
that these claims complied with the three-day and same-day
billing requirements. Id. Defendants did not conduct
this manual review after CHMB assumed responsibility for
billing for the wholly owned and operated physician
taking over responsibility for billing for the physician
practices and with knowledge that they would bill in
violation of the Same-Day and Three-Day Rules, Ms. Worthy
alleges on information and belief that CHMB conducted no
testing of its billing system to ensure compliance with
Medicare regulations, even after she and others raised
concerns. Id. ¶ 141. Senior leadership at Mercy
Hospital, including but not limited to Michael Hachey, Judi
Hawkes, Craig Dreher, and Ms. Worthy, and Judi Kieltyka from
Accretive met biweekly as part of the Committee on Revenue
Excellence (CORE). Id. ¶ 142. At a CORE meeting
on August 21, 2013, Ms. Worthy reminded those present,
including but not limited to Mr. Hachey, Ms. Hawkes, Mr.
Dreher, and Ms. Kieltyka, that CHMB still had no plan in
place for complying with Medicare billing regulations.
Takes Over Billing with Knowledge of Problems
assumed responsibility for the Mercy Hospital outpatient
physician practice billing on August 1, 2013, despite knowing
it was not prepared to handle Mercy's Medicare billings
in a compliant manner. Id. ¶ 143. Based on
concerns about CHMB's ability to submit Medicare bills in
a compliant manner, Ms. Kieltyka instructed CHMB to hold all
Medicare billing until a process was in place to ensure
compliance with Medicare regulations. Id. ¶
144. At an August 21, 2013 CORE meeting, approximately three
weeks after CHMB took over Medicare billing responsibilities,
Ms. Worthy informed the group that CHMB was now holding about
$750, 000 in Medicare billings on behalf of Mercy Hospital,
about 60% of which was tainted by unlawful facility charges
that were not bundled as required by the Same-Day and
Three-Day Rules. Id. ¶ 145.
early September 2013, Ms. Worthy accessed the FISS system and
determined that CHMB was not holding billings as directed but
actually had received about $1 million in Medicare
reimbursements on behalf of Mercy Hospital. Id.
¶ 147. Ms. Worthy determined that contrary to Ms.
Kieltyka's directions, CHMB was billing and receiving
payment from Medicare for office visits and other medical
services subject to the Same-Day and Three-Day Rules.
Id. ¶ 148. She further observed that while
claims to Medicare submitted by CHMB were increasing, Mercy
Hospital's accounts receivable was decreasing.
Id. Ms. Worthy reported the apparent Medicare
overbilling violations to Ms. Kieltyka at Accretive.
Id. ¶ 149. She received no response to her
reports. Id. CHMB officials Janet Boos, Michelle
Pena, and Paula Kacsir (a CHMB Vice President of Client
Services who was assigned to the Mercy Hospital account in
the fall of 2013) all subsequently denied that CHMB was
submitting Medicare claims on behalf of Mercy Hospital and
asserted that CHMB was holding all Medicare claims as
instructed. Id. ¶ 150. In fact, CHMB was
receiving Medicare payments and posting them to accounts at
this time, but falsely represented to Accretive and Mercy
that it was holding Medicare billings. Id.
Creation of Dummy Accounts to Conceal Same-Day and Three-Day
December 2013, Ms. Worthy did an analysis of two weeks of the
claims submitted by CHMB using the FISS system. Id.
¶ 152. She noticed that CHMB first billed Medicare for
services in violation of the Same-Day and Three-Day Rules.
Id. ¶ 155. Medicare then paid CHMB for the
claims. Id. After receiving payment for the claim,
CHMB was supposed to pass the payment on to Mercy Hospital.
Id. ¶ 156. Instead, once CHMB received payment,
CHMB voided the correct patient account, and created a dummy
account under a different name. Id. It then posted
the payment received to Medicare to the dummy account for the
same dollar amount and CPT code as the original claim.
Id. Ms. Worthy was able to determine through the
FISS system that CHMB was not billing Medicare for these
dummy accounts, having already billed Medicare under the
correct patient account. Id. ¶ 159.
voiding of patient accounts and creation of dummy accounts,
which was internal to CHMB and not reported to Medicare,
allowed CHMB to falsely represent to Accretive and Mercy
Hospital that it had not violated the Same-Day or Three-Day
requirements. Id. ¶ 157. The dummy accounts
also served to falsely inflate Mercy Hospital's accounts
receivable and hampered any future attempts at audits or
repayments for violations of the Same-Day or Three-Day Rules
because the payment now appeared under another patient's
name. Id. ¶ 159.
Chase and Richard Moulton, who work for Mercy Hospital
Information Services, attempted to run an audit trail on the
Allscripts computer system to determine who entered the voids
and payments. Id. ¶ 160. They determined that
CHMB had created the dummy accounts but, because an anonymous
computer user had set up the dummy accounts, they could not
link the creation of the dummy accounts to a specific Mercy
Hospital, Accretive, or CHMB employee. Id. In
particular, Mr. Chase informed Ms. Worthy that there were 112
vouchers in CHMB's Allscripts system that had a “no
charge” listing, indicating that there were no services
in the account to be billed. Id. ¶ 161. Mr.
Chase discovered that approximately sixty of these “no
charge” accounts had payments posted, totaling
approximately $6, 000. Id. These payments had been
entered by a user called “chmb401” which had
entered more payments into Allscripts than any ...