Top 5 Healthcare Fraud Schemes: Upcoding and Misbilling (Part 2)

Upcoding and misbilling cases are "factually false" claims under the False Claims Act. The distinction between a "legally false” claim, and a “factually false” claim, was recently explained by the Fifth Circuit Court of Appeals, as follows:

FCA claims can be either legally false or factually false. E.g., United States v. Sci. Applications Int’l Corp., 626 F.3d 1257, 1266 (D.C. Cir. 2010) (recognizing factually false claims as “the paradigmatic case” and legally false claims as the “certification theory”). A claim is factually false when the information provided to the government for reimbursement is inaccurate. [Citation.] A claim is legally false when “a claimant ... falsely certifies compliance with [a] statute or regulation.” See United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 902 (5th Cir. 1997).

United States ex rel. Ruscher v. Omnicare, Inc., 663 F. App'x 368, 373 (5th Cir. 2016)

When a healthcare provider bills for services, it typically does so on a CMS-1500 form, using 5-digit CPT codes. Using a CPT code that misrepresents the services provided on a bill to Medicare is a factually “false” claim for purposes of the FCA, as it constitutes billing for services not performed, or misrepresenting the services performed. See, e.g., U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 192 (5th Cir. 2009) (“Also alleged are specific dates that each doctor falsely claimed to have provided services to patients and often the type of medical service or its Current Procedural Terminology code that would have been used in the bill.”); U.S. ex rel. Parikh v. Citizens Med. Ctr., 977 F. Supp. 2d 654, 662 (S.D. Tex. 2013); United States ex rel. Emerson Park v. Legacy Heart Care, LLC, No. 3:16-CV-0803-S, 2019 WL 4450371, at *9 (N.D. Tex. Sept. 17, 2019) (“Relator alleged that Remaining Defendants are liable under the FCA for ‘upcoding [E&M] services to the highest level billing codes’—i.e., charging Medicare for unnecessary services or services that were never actually provided.  A defendant charging the Government for services not actually provided is a staple FCA violation.”); United States v. Wagoner, No. 2:17-CV-478-TLS, 2018 WL 4539819, at *5 (N.D. Ind. Sept. 20, 2018); United States ex rel. Turner v. Michaelis Jackson & Assocs., No. 03-CV-4219-JPG, 2007 WL 496384, at *7 (S.D. Ill. Feb. 13, 2007) (“relators have shown why the bill submitted to Medicare was false: it was billed pursuant to CPT 99213 rather than CPT 66984”); Krizek, 859 F. Supp. at 7–8.

As explained by the Sixth Circuit Court of Appeals in an opinion affirming the criminal conviction of a physician for Medicare fraud, though the CPT codes and their definitions are published by a private organization (the AMA), their misuse logically gives rise to legal liability. See United States v. Semrau, 693 F.3d 510, 530–31 (6th Cir. 2012). In Semrau, the defendant physician argued that “misuse of CPT codes cannot constitute criminal conduct because they are the product of a private organization and have not been formally promulgated by the government.” Id. at 530. The Sixth Circuit disagreed, explaining as follows:

As an initial matter, it seems clear that the CPT codes themselves create no laws or liability but are merely a government-sanctioned means of summarizing several pieces of information into a concise, standardized number. Congress directed the Secretary of Health and Human Services to “prescribe such regulations as may be necessary to carry out the administration of” Medicare, 42 U.S.C. § 1395hh(a)(1), and to “establish a uniform procedure coding system for the coding of all physicians’ services,” id. § 1395w–4(c)(5). The Secretary acted on this authority by adopting the CPT code set drafted by the AMA. 45 C.F.R. § 162.1002. Dr. Semrau’s attorney himself acknowledged during the trial that CPT codes “are simply a shorthand way of incorporating the description of the service.” Thus, when Dr. Semrau submitted a claim for “99312,” he was effectively submitting a claim for the services associated with that number in the AMA’s CPT code set, as defined above.

It is illogical to suggest that a person could escape liability because a claim comes in the form of a number instead of the words directly associated with that number. This is particularly true for the statute in question because “[t]he broad language of § 1347 shows that Congress intended for this statute to include within its scope a wide range of conduct so that all forms of health care fraud would be proscribed, regardless of the kind of specific schemes unscrupulous persons may concoct.” United States v. Lucien, 347 F.3d 45, 51 (2d Cir.2003). In short, § 1347 “is simply a fraud statute.” United States v. Franklin–El, 554 F.3d 903, 911 (10th Cir.2009). “Although the health care fraud statute does not (and could not) specify the innumerable fraud schemes one may devise,” id. at 910–11, it is difficult to imagine a more obvious way to commit healthcare fraud than billing for services not actually rendered. Indeed, this court and other circuits have previously upheld convictions for CPT “upcoding.” [Citations].

Id. at 530–31.

When a healthcare provider bills using CPT codes, it represents that it has completed all of the services described by the AMA under that code in the official CPT manual. If the provider has not rendered all of those services when it submits a bill, it is violating the False Claims Act.


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