United States Ex Rel. Mikes v. Straus
1999 WL 1066863, 84 F.Supp.2d 427 (1999)
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Rule of Law:
A claim submitted for government reimbursement is not 'false or fraudulent' under the False Claims Act (FCA) merely because the underlying service failed to comply with a professional standard of care or a technical regulation, unless compliance with that specific standard or regulation is an express prerequisite to payment.
Facts:
- Dr. Patricia Mikes was hired as a pulmonologist by Pulmonary and Critical Care Associates (PCCA), a medical practice run by Drs. Straus, Ambinder, and Friedman, beginning around July 1, 1991.
- In the fall of 1991, Mikes expressed concerns to Dr. Straus that spirometry tests at PCCA were not being performed according to the standards recommended by the American Thoracic Society (ATS).
- Mikes specifically alleged that the spirometry equipment was not being properly calibrated on a daily basis.
- Mikes also claimed the tests were performed by inadequately trained medical assistants.
- She requested that PCCA purchase a calibration syringe and offered to train the assistants herself.
- Following this conversation, Mikes's employment relationship with PCCA deteriorated.
- Mikes was subsequently denied admitting and consulting privileges at a local hospital.
- Citing her loss of hospital privileges as cause under her employment contract, PCCA terminated Mikes on or about December 16, 1991.
Procedural Posture:
- Patricia Mikes, as a qui tam relator, filed suit against her former employers, Drs. Straus, Ambinder, and Friedman, in the U.S. District Court for the Southern District of New York under the False Claims Act.
- In May 1994, the district court dismissed Mikes's original complaint for failing to plead fraud with particularity.
- Mikes filed a First Amended Complaint, and Defendants moved to dismiss.
- In June 1995, the court converted the motion into one for summary judgment, denied it at that preliminary stage, and ordered Mikes's state law and retaliatory discharge claims to arbitration.
- Mikes subsequently filed a Second Amended Complaint and a Supplemental Complaint.
- The U.S. Government formally declined to intervene in the action.
- Defendants filed a counterclaim against Mikes for extortion.
- Defendants moved for summary judgment on Mikes’s FCA claims, and Mikes cross-moved for partial summary judgment.
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Issue:
Does a healthcare provider's submission of a claim for Medicare reimbursement for a service that allegedly fails to meet professionally recognized standards of care, without more, constitute a 'false or fraudulent claim' actionable under the False Claims Act?
Opinions:
Majority - McMahon, District Judge
No. A healthcare provider's failure to adhere to a professional standard of care when performing a service does not, by itself, render a claim for that service 'false or fraudulent' under the False Claims Act. The FCA addresses fraud, not claims of professional negligence. Mikes's argument relies on a theory of 'implied false certification,' which posits that a claim for payment implicitly certifies compliance with all relevant statutes and regulations. The court rejects this broad application, adopting a narrower view that such a theory only applies when the government's payment is expressly conditioned on compliance with the specific statute or regulation at issue. Here, Mikes failed to show that Medicare reimbursement was conditioned on following ATS guidelines or the quality-of-care provisions in 42 U.S.C. § 1320c-5. The Medicare claim form did not require certification of such compliance, and the statutory remedy for quality-of-care violations is post-payment sanctions, not denial of payment, indicating compliance is not a prerequisite. Furthermore, Mikes failed to establish the scienter element, as she provided no evidence that the defendants knew their claims were false or acted with reckless disregard; awareness of a potential deviation from a professional standard is not knowledge of a false claim.
Analysis:
This decision significantly limits the scope of the 'implied false certification' theory under the False Claims Act, particularly in the healthcare context. It clarifies that the FCA is not a vehicle for policing medical quality of care or enforcing regulatory compliance where such compliance is not an explicit condition of payment. By establishing a materiality threshold—that the government would have refused payment had it known of the non-compliance—the ruling prevents ordinary medical negligence or malpractice claims from being elevated to the level of federal fraud. This raises the evidentiary bar for qui tam relators, requiring them to prove not just a regulatory violation but also that the violation was material to the government's decision to pay.
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