Health Law Daily Wrap Up, FALSE CLAIMS ACT—N.D. Ind.: Falsity and Provider’s knowledge of falsity in CPT code use were issues for trial, (Sep 20, 2024)

By Jeffrey H. Brochin, J.D.

Knowledge of the falsity of a code use was issue for trial, however, the Government failed to offer sufficient evidence to create a genuine dispute of fact that the urine drug tests performed by the Provider lacked medical necessity.

A federal district court in Indiana has granted in part and denied in part the Motion for Summary Judgement filed by Wagoner Medical Center, LLC (Provider) in a False Claims Act (FCA) lawsuit brought by the United States (Government) and the State of Indiana (State). The Complaint alleged that the Provider’s use of a certain CPT code for billing 5,217 reimbursement claims for urine drug tests to Indiana Medicaid was fraudulent and resulted in an overpayment of $1,030,162.03. Although the issues of falsity and the Provider’s knowledge of falsity as to improper code use were issues for trial, the Government failed to prove that the tests performed lacked the necessary medical necessity, (U.S. v. Wagoner, No. 2:17-cv-00478-TLS (N.D. Ind. Sept. 17, 2024)).

Dispute as to CPT code. The Government’s Complaint alleged that from January 1, 2011, to January 13, 2013, when seeking reimbursement from Indiana Medicaid for processing urine drug testing for the 5,217 claims at issue, the Provider used CPT Code 80101. The Provider’s medical billing and coding expert testified that the American Medical Association’s (AMA) CPT was authoritative on the use of CPT Codes, and that the 2011 AMA CPT provided several relevant codes for billing for urine drug tests. For example, CPT Code 80100 was listed for “Drug screen, qualitative; multiple drug classes chromatographic method, each procedure”, while CPT Code 80101, (which was used by the Provider) is used to bill “for processing a urine drug test with a “single drug class method (eg, immunoassay, enzyme assay), each drug class.”

However, CPT Code 80101 contained additional language that instructed: ‘for qualitative analysis by multiplexed drug screening kit for multiple drugs or drug classes, use 80104’. The Government contended that the Provider’s use of CPT Code 80101 was fraudulent and that the test kits they used required the CPT Code 80104.

Medical necessity. The Complaint further alleged that the tests performed by the Provider lacked medical necessity and the Government’s expert testified that out of 88 samples examined, 80 lacked medical necessity. He based his opinion on his reading of the AMA’s definition of medical necessity. The Provider’s expert countered that all 88 tests were conducted out of medical necessity, and that the term ‘medical necessity’ itself was not a uniform standard but rather a business tool used by the third-party payers which held no standardized meaning. He further testified that “if the patient has a condition for which ordering that test is . . . medically necessary, [then] it’s a medically necessary test.”

Proofs of falsity. The court noted that to establish a prima facie case for a violation based on a false or fraudulent claim or a false record or statement under the FCA, the Government needed to prove (1) that the Provider made a claim, record, or statement in order to receive money from the government; (2) that the claim, record, or statement was false; and (3) that the Provider knew the claim, record, or statement was false. An FCA case requires proof of falsity, knowledge, materiality (meaning whether the alleged misrepresentations had the natural tendency to influence the payment or receipt of funds), and the involvement of federal funds.

The Provider only moved for summary judgment on the elements of falsity and knowledge on the Government’s FCA claims based on seeking reimbursement from Indiana Medicaid using CPT Code 80101 and based on a lack of medical necessity; however, they did not seek summary judgment based on the elements of materiality or federal funds.

Issues for trial. It was undisputed that the 2011 CPT was authoritative on the CPT Codes at issue, and, that the Provider performed the qualitative analysis of urine samples by using multiplexed drug screening kits for multiple drug classes that were an immunoassay. It was also true that the Provider billed Indiana Medicaid for those services using CPT Code 80101—a CPT Code for a urine drug test that is an immunoassay. However, the Government alleged that the Provider falsely used CPT Code 80101 instead of the correct code—CPT Code 80104—with knowledge of that falsity. The Provider countered that the language of CPT Code 80104 itself meant that it was the incorrect CPT Code to use for reimbursement for their urine drug screening services because their kits used a “chromatographic method”, and CPT Code 80104 was for tests using a method “other than a chromatographic method.”

Accordingly, the court concluded that a genuine dispute of material fact existed as to whether the Provider falsely used CPT Code 80101 with knowledge of that falsity in billing Indiana Medicaid, and they denied the motion for summary judgement as to the issues of falsity and knowledge of the falsity based on use of CPT Code 80101.

Indiana Medicaid definition. Indiana Medicaid conditions payment for such services as drug tests on “medical necessity,” defined as ‘the evaluation of health care services to determine if they are medically appropriate and necessary to meet basic health needs; consistent with the diagnosis or condition and rendered in a cost-effective manner; and consistent with national medical practice guidelines regarding type, frequency, and duration of treatment.” Consequently, to show that under the FCA the Provider submitted false claims to Indiana Medicaid on the basis that the claims lacked medical necessity, the Government needed to establish that the urine drug tests performed by the Provider were not a medical necessity as defined by Indiana Medicaid.

Although the experts offered differing interpretations of the AMA’s definition of medical necessity as applied to urine drug tests, the court determined that this was insufficient to create a genuine dispute of fact. The Provider offered evidence that urine drug tests are a medical necessity so long as “the patient has a condition for which the test is necessary,” and the court found that the Government offered insufficient evidence to create a genuine dispute of fact that the urine drug tests performed by the Provider lacked medical necessity. Accordingly, the motion for summary judgement was granted as to the issue of medical necessity.

The case is No. 2:17-cv-00478-TLS.

Judge: Springman, T.

Attorneys: Wayne T. Ault, U.S. Attorney's Office, for the U.S. Jeremy L. Johnson, Indiana Attorney General's Office, for State of Indiana. Christopher A. Melton (Wyatt, Tarrant & Combs, LLP) for Don J. Wagoner and Wagoner Medical Center, L.L.C.

Companies: State of Indiana; Wagoner Medical Center, L.L.C.

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