Court Disallows Government Experts Using “Wrong Standard” to Determine Medical Necessity

Dismisses Expert Testimony, Grants Multiple Summary Judgements for Defendants in FCA Case

The Federal Court paid close attention to the semantics used by the Reviewers, and took exception to the Government's explanation.

The Federal Court paid close attention to the semantics used by the Reviewers, and took exception to the Government’s explanation.

The U.S. District Court for the Southern District of Georgia recently ruled in favor of a rehabilitation therapy agency defendant after excluding the Government experts’ testimony and opinions in a False Claims Act (FCA) case. The court ruled that the experts applied the wrong standard for evaluation of the medical necessity of skilled therapy services in a Medicare Part A skilled nursing facility (SNF) stay.

Allegations of False Claims

The whistleblower, Reid Lawson, a former physical therapist for Aegis Therapies, Inc., accused the company of systematically and knowingly billing Medicare for medically unnecessary skilled therapy services. (Find the document at U.S. ex rel. Lawson v. Aegis Therapies, Inc., Case 2:10-cv-00072-LGW-RSB, Doc. No. 162 at 3-4 (S.D. Ga. Mar. 31, 2015).) Shortly after the original complaint was filed, the government filed its own complaint against both Aegis and Golden LivingCenters in Jesup, Georgia, the SNF that had submitted the claims at issue. Simply put, the complaint accused the therapy company of setting goals for unnecessary high intensity therapy, and allegedly pressured therapists to deliver such high intensity therapy without regard to medical necessity.

Government Experts Testimony

Nuff said. Fortunately for the provider here, the government experts missed some.

Nuff said. Fortunately for the provider here, the government experts missed some.

The government’s experts — one nurse and one physician — reviewed a sample of 30 patients and determined that 29 out of 30 received medically unnecessary therapy services. The experts reviewed the patients’ SNF and hospital records and “noted a ‘pattern of unreasonable and unnecessary therapy services that are reflected in a pattern of beneficiaries receiving all three disciplines (physical therapy, occupational therapy, and speech therapy) at alarmingly high levels of intensity and duration upon return from the hospital.’” The experts also claimed inconsistencies between the amount of therapy delivered and the amount of therapy needed based on the patients’ clinical conditions as noted in their medical records.

While that may seem like pretty damaging testimony, the court noticed that expert testimony is intended to help the court either understand evidence being offered or to determine some fact in issue. (See pgs. 12-13 of the PDF, which includes a citation of United States v. Frazier, 387 F.3d 1244, 1260 (11th Cir. 2004).)

What is the Standard CMS Uses to Judge Medical Necessity?

A question the court wanted to answer was, what is the standard set forth in CMS guidance for the medical necessity of skilled therapy services in a Part A SNF stay? The court noted that in fact, CMS RAI Manual v. 3.0, Ch. 3, 0-18 indicates that the standard “is whether or not the services billed to the Government were provided ‘with the expectation, based on the assessment of the resident’s restoration potential made by the physician, that the condition of the patient will improve materially in a reasonable and generally predictable period of time.’” The government’s experts, however, used a different standard – they were looking for “significant improvement” or “significant practical improvement,” rather than “material improvement.”

Upon reading about the government arguing for their interpretation of their experts' words to give them an advantage, I just had to pull up this quote from "1984" by George Orwell.

Upon reading about the government arguing for their interpretation of their experts’ words to give them an advantage, I just had to pull up this quote from “1984” by George Orwell.

The district court concluded that the “significant improvement” standard used by the government’s experts was not equivalent to the “material improvement” standard used by CMS, and therefore was not applicable in this case. The Government tried to argue that the experts were not using the phrase “significant improvement” in its legal sense, but rather to convey the necessity under Part A for an improvement beyond de minimis. Nevertheless, the district court rejected the argument, concluding that the Government experts’ analyses and conclusions were based upon repeated and erroneous evaluations of Aegis’ billing practices. Therefore, the experts analyzed the wrong problem and so did not assist the Court to determine a fact in issue – whether the care provided was in fact medically necessary or not.

Court Issues Multiple Summary Judgments

A summary judgement basically means there will be no trial, the Judge just decided the case. End of story.

A summary judgement basically means there will be no trial, or the trial is over, as the Judge just decided the case. End of story, have a nice weekend, you don’t have to go home but you can’t stay here.

Without the experts’ testimonies then, the Government could not show any of the claims in question as false, objectively or otherwise. Also, the Government’s other claims of “unjust enrichment and payment by mistake” were considered to be only a derivative of the FCA claims, and therefore the Court issued summary judgments for the defendants for those claims as well.

In the end, all the claims were left as is, although this reporter wonders what else the government might have up their sleeve. Perhaps they can raise the same issues for other claims, at a later time, with more careful analyses and expert testimony? Considering the sums involved, perhaps that is exactly what they will do. Regardless, with this experience in mind, we can expect to see the government go after other agencies, other types of providers, trying to avoid making the same mistakes made in these cases.

Conclusion

One must be careful how this weapon is used, lest it is turned on you as well as your opponent...

One must be careful how this weapon is used, lest it is turned on you as well as your opponent…

While the case concerned a SNF and a Rehabilitation agency, the decision is a highly valuable lesson on checking and analyzing the testimony of experts, to ensure that they apply the appropriate standard when forming and articulating their opinions. Application of the wrong standard can result in an opinion that does not address the issues in the case, will not be unhelpful and may be potentially misleading, which all may result in exclusion of the opinions from the case.

Of course, this is a double-edged sword, and can be applied to any expert, on either side of the case.

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