United States v. Krizek
111 F.3d 934 (1997)
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Rule of Law:
Under the False Claims Act (FCA), a "claim" is the entire reimbursement form submitted for payment, not each individual service code listed on the form. Furthermore, the FCA's scienter requirement of "reckless disregard" for the truth is satisfied by conduct that amounts to an extreme version of negligence, or "gross negligence-plus," and does not require a finding of specific intent to defraud.
Facts:
- Dr. George Krizek was a psychiatrist who provided services to Medicare and Medicaid patients.
- His wife, Blanka Krizek, managed the practice's billing records and submitted reimbursement forms (HCFA 1500) to Pennsylvania Blue Shield on his behalf.
- Between January 1986 and March 1992, the Krizeks submitted these forms using specific five-digit Current Procedures Terminology (CPT) codes to identify the services provided, such as '90844' for a 45-50 minute psychotherapy session.
- The Krizeks maintained a "seriously deficient" system of recordkeeping.
- On several occasions, the Krizeks submitted bills for patient services that totaled a physically impossible amount of time, including instances where the billed time exceeded 24 hours in a single day.
Procedural Posture:
- The United States government filed a civil suit against George and Blanka Krizek in the U.S. District Court for the District of Columbia, alleging violations of the False Claims Act (FCA).
- The parties agreed to a bench trial focusing on a representative sample of seven patients to determine liability.
- The District Court found the Krizeks liable under the FCA, concluding they acted with reckless disregard by submitting claims for impossible amounts of time due to a "seriously deficient" recordkeeping system.
- The court initially established a "nine-hour per day" benchmark for identifying false claims and referred the case to a Special Master to calculate damages.
- The Special Master, treating each individual CPT code as a separate claim, determined there were 1,149 false claims and recommended over $5.7 million in penalties.
- The District Court rejected the Special Master's claim-counting method and revised its liability standard to claims exceeding 24 hours in a single day, finding only 11 false claims.
- The District Court entered a final judgment against the Krizeks for $168,105.39.
- The government appealed the District Court's final judgment, and the Krizeks filed a cross-appeal.
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Issue:
Under the False Claims Act, is each individual service code listed on a government reimbursement form considered a separate "claim" for the purpose of calculating statutory penalties, or is the entire form considered a single "claim"?
Opinions:
Majority - Sentelle
No. Under the False Claims Act, the entire HCFA 1500 reimbursement form constitutes a single "claim," not each individual CPT code listed on it. The court's analysis must focus on the conduct of the defendant, specifically the number of times they made a "request or demand" for payment. In this case, the Krizeks made one request or demand each time they submitted an HCFA 1500 form. The CPT codes function merely as items on an invoice to explain how the total charge—the single demand—was calculated. The court rejected the government's argument that the claim unit should be defined by its internal processing methods, stating that liability is created by the defendant's conduct, not the government's accounting practices. The court also held that the FCA's "reckless disregard" standard was met by the Krizeks' conduct, defining it as an extreme form of negligence rather than a lesser form of intent. The act of billing for more than 24 hours in a day, combined with a complete failure to review the submissions, amply supported the finding of reckless disregard.
Analysis:
This case significantly clarifies the unit of prosecution for penalties under the False Claims Act, particularly in healthcare billing. By defining a "claim" as the entire submission form rather than each line-item code, the decision limits the government's ability to seek astronomical penalties based on a single form containing multiple errors. This holding forces courts to focus on the defendant's affirmative act of submitting a request for payment. The decision also solidifies the interpretation of the "reckless disregard" scienter standard as an objective, gross-negligence standard, making it easier for the government to prove liability against providers with extremely sloppy or non-existent compliance and record-keeping systems, without needing to prove a subjective intent to defraud.
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