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U.S. EX REL. MIKES v. STRAUS

November 18, 1999

UNITED STATES EX REL. PATRICIA S. MIKES, AND PATRICIA S. MIKES, INDIVIDUALLY, PLAINTIFFS,
v.
MARC J. STRAUS, JEFFREY M. AMBINDER AND ELIOT L. FRIEDMAN, DEFENDANTS.



The opinion of the court was delivered by: McMAHON, District Judge.

   
MEMORANDUM DECISION AND ORDER GRANTING DEFENDANTS' MOTION FOR
  SUMMARY JUDGMENT

Patricia Mikes, M.D., a former employee of Defendants Marc Straus, M.D., Jeffrey Ambinder, M.D., and Eliot Friedman, M.D., brought an action following her termination as qui tam relator and as plaintiff in her individual capacity against Defendants under the False Claims Act, 31 U.S.C. § 3729 et seq. (1994) ("FCA") for (1) submission of fraudulent Medicare claims based on improperly performed spirometry tests, (2) use of false records of spirometry tests to obtain Medicare reimbursement, and (3) conspiracy by Defendants to defraud the Government by filing false Medicare claims. Defendants counterclaimed for extortion. Defendants have moved for summary judgment on Mikes's FCA claims, and Mikes has cross-moved for partial summary judgment on the first two elements of her FCA claims. For the reasons that follow, Defendants' motion is granted in its entirety.

Background

Defendants are physicians licensed in New York who specialize in oncology and hematology. In or around 1991, Defendants formed Pulmonary and Critical Care Associates ("PCCA"), a medical practice with a focus on treatment of pulmonary, or lung-related, conditions, which maintains offices in various locations in Westchester and Putnam Counties. Mikes, a pulmonologist, was employed by PCCA beginning on or about July 1, 1991, and was based in PCCA's White Plains office. She was hired pursuant to an employment contract, which allowed PCCA to terminate her with or without cause, and provided that cause included failure to maintain consulting and admitting privileges at local hospitals.

Mikes avers that in the fall of 1991, she met with Defendant Straus to express her concerns about the administration of spirometry tests, which are used to measure the speed and volume at which patients can exhale, to patients at PCCA.*fn1 Specifically, Mikes alleges that she told Straus that the test results might not be accurate because the equipment was not being calibrated using a three-liter syringe or checked for calibration on a daily basis and after being moved, as per the recommendation of the American Thoracic Society (ATS). She further claims that she voiced her worry to Straus over the fact that the tests were being performed by foreign medical school graduates, employed as medical assistants, who she felt were inadequately trained to perform the tests. Mikes also claims that she requested that PCCA purchase a calibration syringe for the purpose of ensuring the accuracy of spirometry tests, and offered to train the medical assistants who carried out the tests.

Subsequent to this conversation, Mikes's employment relationship with Defendants deteriorated, for reasons disputed by the parties. Mikes contends that Defendants became hostile toward her as a result of her expressed disapproval of the performance of spirometry tests at PCCA. Defendants respond that tension developed between Mikes and themselves due to contentious behavior by Mikes toward her peers and incompetence with respect to patients. Whatever the reason, Mikes was denied hospital privileges by Hudson Valley Community Hospital (at that time Peekskill Hospital). In accordance with the terms of her employment contract, Defendants terminated Mikes on or about December 16, 1991.

Mikes brought the present action on April 16, 1992. The case comes before this Court following a lengthy procedural history. In May 1994, Mikes's original five-count complaint, including claims for unwarranted and improperly performed spirometry and Magnetic Resonance Imaging (MRI) tests under the FCA, retaliatory discharge under the FCA and New York Labor Law, and unpaid wages under the New York Labor Law, was dismissed by Judge Broderick of this Court for, inter alia, failing to plead fraud with particularity pursuant to Fed.R.Civ.P. 9(b). See United States ex rel. Mikes v. Straus, 853 F. Supp. 115, 117 (S.D.N.Y. 1994). Mikes then filed a First Amended Complaint containing the same claims, and Defendants moved again to dismiss under Fed.R.Civ.P. 9(b) and 12(b)(6), or alternatively, to compel arbitration. In June 1995, Judge Conner, to whom the case had been reassigned, converted Defendants' motion sua sponte into a motion for summary judgment. Emphasizing the procedural posture of the case, the Court stated that it did not expect Mikes to be able to detail every aspect of Defendants' alleged FCA violations prior to discovery, and concluded that Mikes's affidavit outlining Defendants' overuse and negligent administration of spirometry tests was sufficient for her to avoid summary judgment on her fraud claims under the FCA at that stage of the litigation. See Mikes, 889 F. Supp. 746, 751-52. Judge Conner also ordered arbitration of Mikes's state claims as well as her retaliatory discharge claim under the FCA. See id. at 755-57. In March 1996, Mikes filed a Second Amended Complaint reiterating her allegations with respect to the performance of spirometry and MRI tests by Defendants. Following various other motions relating to Defendants' affirmative defenses and counterclaims and extension of discovery, Mikes filed a Supplemental Complaint in July 1999, in which she withdrew her claims relating to MRI tests. The Supplemental Complaint alleges that Defendants filed for Medicare reimbursements for spirometry tests that were knowingly (a) performed in an inappropriate and improper manner by untrained and unsupervised medical assistants; (b) performed on equipment that was not calibrated, such that a reasonable person would know that useless and inaccurate results would be obtained; and (c) performed when the condition of the patient did not warrant its administration. (Mikes Supp. Cmplt. at 11-12.) The case was reassigned to me shortly after the filing of the Supplemental Complaint. On August 17, 1999, the U.S. Attorney gave notice to the Court of its intention not to intervene in the action.

In their Answer to Mikes's Second Amended Complaint, Defendants asserted a counterclaim against Mikes for extortion on the basis of her FCA suit. As of October 13, 1999, Mikes had not filed a responsive pleading with respect to the counterclaim, and on that date Defendants filed a Motion for Entry of Default under Fed.R.Civ.P. 55(a), which was denied at oral argument before this Court on October 29, 1999.

Standard for Summary Judgment

Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. See Fed. R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue for trial exists if, based on the record as a whole, a reasonable jury could find in favor of the non-movant. See Liberty Lobby, 477 U.S. at 248, 106 S.Ct. 2505. In making its determination, the court must resolve all ambiguities and draw all reasonable inferences in favor of the non-movant. See id. at 255, 106 S.Ct. 2505. To defeat summary judgment, the non-moving party must go beyond the pleadings and "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

False Claims Act

The FCA, as amended, imposes liability on any person who (1) "knowingly presents, or causes to be presented, to . . . the United States Government . . . a false or fraudulent claim for payment or approval, (2) `knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government,'" or (3) conspires to defraud the Government by getting a false or fraudulent claim allowed or paid. 31 U.S.C. § 3729(a)(1)-(3). The statute defines "knowingly" as meaning that an individual has "actual knowledge" of the information, acts in "deliberate ignorance" of the truth or falsity of the information, or acts in "reckless disregard" of the truth or falsity of the information, and provides that "no proof of specific intent to defraud is required." § 3729(b)(1)-(3). A private individual — the qui tam relator — may bring an action for a violation of § 3729 on his or her own behalf as well as that of the Government. See § 3730(b)(1).

To prevail on a claim under § 3729(a)(1), a relator must establish four things: (1) the defendant presented or caused to be presented a claim to the United States for payment or approval; (2) the claim was false or fraudulent; (3) the defendant knew the claim was false or fraudulent; and (4) the United States suffered damages as a result of the false or fraudulent claim. See Blusal Meats, Inc. v. United States, 638 F. Supp. 824, 827 (S.D.N.Y. 1986) (stating elements of same claim under pre-amendment subsection), aff'd, 817 F.2d 1007 (2d Cir. 1987). Similarly, a plaintiff bringing a claim under § 3729(a)(2) must show that (1) the defendant made or used, or caused to be used, a record or statement to get a claim against the United States paid or approved; (2) the record or statement and the claim it supported were both false or fraudulent; and (3) the defendant knew that the record or statement and the claim it supported were false or fraudulent, and (4) the United States suffered damages as a result of the false or fraudulent claim. See id. Finally, to satisfy the elements of a conspiracy to defraud claim under § 3729(a)(3), a plaintiff is required to demonstrate that (1) the defendant conspired with one or more persons to get a false or fraudulent claim allowed or paid by the United States, (2) one or more conspirators performed any act to effect the object of the conspiracy, and (3) the United States has suffered damages as a result of the false or fraudulent claim. See id. at 828.

The parties do not appear to dispute that Defendants made "claims" within the meaning of the FCA when they submitted claims for Medicare reimbursements for the spirometry tests that they performed on patients at PCCA. Rather, Defendants challenge Mikes's contention that the Medicare claims made by Defendants were false or fraudulent. Defendants correctly point out that Mikes is unable to point to a single identifiably false claim made during her employment at PCCA.*fn2 Instead, she cites a number of documentary sources describing the standard of care for the administration of spirometry tests, most prominently, the guidelines promulgated by the American Thoracic Society (ATS), which recommend daily calibration of spirometers using a three-liter syringe. Mikes claims that Defendants' failure to follow the ATS recommendation amounts to a breach of the applicable standard of care, so that Defendants' Medicare submissions were based on negligently performed spirometry tests. For this reason, she argues, Defendants' Medicare claims were fraudulent within the meaning of the FCA. I note first that Mikes has failed to demonstrate that the ATS guidelines in fact constitute the standard of care for operation of spirometers, let alone that Medicare claims for spirometry not performed in compliance with those guidelines may be deemed fraudulent under the FCA. But even had she made this showing, her proposition that Defendants' alleged professional negligence is actionable under the Act is incorrect. Submitting a claim to the Government for a service that was not provided in accordance with the relevant standard of care, however, without more, does not render that claim false or fraudulent for FCA purposes. See Hagood v. Sonoma County Water Agency, 81 F.3d 1465, 1478 (9th Cir. 1996), cert. denied, 519 U.S. 865, 117 ...


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