U.S. District Judge in Maine Orders Healthcare Fraud Case Forward

January 18, 2017

U.S. District Judge John A. Woodcock of the District of Maine denied motions to dismiss a whistleblower's claims that a Maine hospital, Mercy Hospital of Maine, and several professional billing management companies, engaged in an alleged scheme to fraudulently bill Medicare and other federal healthcare programs.

The fraudulent billing practices alleged in the suit– which included unbundling Medicare claims, changing billing codes to bypass Medicare edits, creating dummy patient accounts, altering patient discharge codes, and mass rebilling – caused the federal government to pay claims it otherwise would not have paid. According to the complaint, Defendants Mercy, Accretive, and California Healthcare Medical Billing engaged in a scheme to "lift" the hospital's billing collections using, among other things, Accretive's proprietary Yield Based Follow Up (YBFU) tool to identify, modify, and resubmit high-value claims previously rejected by Medicare. The relator alleged that Defendants unlawfully unbundled claims, adding false Modifier -59 and G0 condition codes to avoid Medicare's detection. The relator further alleged that the Defendants overbilled Medicare by submitting claims in violation of the three-day and same-day payment rules, which prohibit duplicative payments for medical facility fees. See 42 C.F.R. § 412.2(c)(5); MCPM, CMS Pub. No. 100-04, ch. 4, §§ 10.4, 170.

The relator pled that she persistently reported her concerns regarding possible billing fraud to Defendants over the course of her employment. The suit alleges that her employer retaliated against her and constructively discharged her.

The Defendants moved to dismiss most of the relator's False Claims Act and state claims, arguing that her complaint did not meet the appropriate pleading standards and that the alleged billing practices were immaterial to whether Medicare would pay claims under the applicable statutes. Unconvinced, Judge Woodcock denied these motions to dismiss, clearing the way for the case to proceed to discovery.

Murphy Anderson attorneys Mark Hanna, Catherine Lusk and Adam Breihan are litigating the case along with co-counsel David Bocian and Asher Alavi of Kessler, Topaz, Meltzer & Check, LLP and Jeffery Neil Young and David Webbert of Johnson, Webbert & Young, LLC.