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United States v. Team Finance, L.L.C.

United States District Court, E.D. Texas, Marshall Division

August 20, 2019

UNITED STATES OF AMERICA, CALEB HERNANDEZ & JASON WHALEY, RELATORS; ET AL.; Plaintiffs,
v.
TEAM FINANCE, L.L.C., TEAM HEALTH, INC., TEAM HEALTH HOLDINGS, INC., AMERITEAM SERVICES, L.L.C., Defendants.

          MEMORANDUM OPINION AND ORDER

          RODNEY GILSTRAP UNITED STATES DISTRICT JUDGE

         Before the Court is Defendants Team Health Holdings, Inc., Team Finance, LLC, Team Health, Inc., and AmeriTeam Services, LLC's (collectively, “Defendants” or “TeamHealth”) Motion to Dismiss the Relators' First Amended Complaint (the “Motion”). (Dkt. No. 37.) Having considered the Motion, briefing, and relevant authorities, the Court hereby GRANTS the Motion to the extend and for the reasons discussed herein.

         I. BACKGROUND

         A. Procedural History

         On April 25, 2016, Relators Caleb S. Hernandez and Jason W. Whaley (collectively, “Relators”) filed suit against Defendants Team Health Holdings, Inc. (“THHI”), Team Finance, LLC (“TF”), and Team Health, Inc. (“THI”) under the qui tam provisions of the Federal False Claims Act, 31 US.C. §§ 3729 et seq. (“FCA”), and analogous state statutes. (Dkt. No. 1 (complaint).)[1] On June 28, 2018, the United States of America and the Plaintiff state governments declined to intervene. (Dkt. No. 20.) Relators subsequently amended the Complaint on November 12, 2018 to add AmeriTeam Services, LLC (“AmeriTeam”) as a defendant. (Dkt. No. 33 (First Amended Complaint).) Defendants now move to dismiss the First Amended Complaint (“FAC”) under Federal Rules of Civil Procedure 12(b)(1), 12(b)(6) and 9(b). (Dkt. No. 37.)

         B. The Parties and the Alleged Fraud

          TeamHealth is a healthcare practice management company that “provides staffing, operations, and billing services to emergency departments as an outside contractor.” (Dkt. No. 33 ¶ 1.) According to Relators, TeamHealth “is one of the largest suppliers of outsourced physician staffing and administrative services to hospitals in the United States, ” “operates in at least forty-seven states, and employs at least 13, 000 healthcare professionals.” (Id. ¶ 12.)

         Relators are healthcare providers that formally worked for TeamHealth as independent contractors. (Id. ¶¶ 10-11.) Relator Hernandez is a physician and has worked “at the following hospital emergency departments managed and/or operated by TeamHealth: the North Colorado Medical Center in Greely, Colorado (from 2011 to 2015); Sterling Regional Medical Center in Sterling, Colorado (from 2014 to 2015); and Juan Luis Phillipe Hospital in St. Croix, United States Virgin Islands (in 2010).” (Id. ¶ 10.) Relator Whaley is a physician assistant and worked “at the emergency department at North Colorado Medical Center, located in Greely, Colorado (from 2011 to 2013), which was and is operated and/or managed by TeamHealth.” (Id. ¶ 11.)

         Relators allege that TeamHealth has engaged in two schemes to defraud Medicare and several state Medicaid programs. The introductory paragraphs from the Relators' FAC succinctly summarize each alleged scheme:

2. The first Scheme is the “Mid-Level Scheme.” Under the Mid-Level Scheme, TeamHealth overbills for services provided by “mid-level” practitioners. The term “mid-level” refers to non-physician healthcare providers, such as Physician Assistants (“PAs”) and Nurse Practitioners (“NPs”). Under [the Medicare and/or Medicaid (collectively, “CMS”)] rules, a mid-level's services are reimbursed at 85% of the standard physician rate, while services rendered by a physician are reimbursed at 100% of the standard physician rate. These rates and percentages are set by CMS, and the Plaintiff States have largely, if not entirely, adopted these same rates and percentages for reimbursement.
3. The appropriate rate payable for services rendered to a CMS beneficiary is automatically triggered by the National Provider Identifier (“NPI”) submitted with the claim for reimbursement. Services rendered by a mid-level should be submitted under the mid-level's NPI, triggering the 85% rate. Services rendered by a physician should be submitted under the physician's NPI, triggering the 100% rate. However, as outlined in ¶¶ 2-6, herein, and stated with more particularity in §§ V-IV, infra (principally § V.B), TeamHealth-through its billing policies, procedures, and protocols (which include training and guidelines), and through its coordinated operation and influence over its subsidiaries and affiliated professional entities-systematically submits claims for mid-level services under various physicians' NPIs (as assigning charts to a physician by a midlevel is usually based on shift assignments and how shifts overlap), triggering the 100% rate when in fact the 85% rate applied. TeamHealth does this intentionally and has done so for years.
4. Through its billing policies and practices, TeamHealth attempts to cover up the Mid-Level Scheme by characterizing mid-level services as “split/shared.” Under CMS rules, “split/shared” services occur when both a mid-level and a physician treat the same patient during the same visit, such that the services are split or shared between a mid-level and a physician. When this happens, the mid-level's services may be billed under the physicians' NPI at 100% of the physician rate. However, true split/shared visits are exceedingly rare at TeamHealth facilities-they almost never occur. This is because TeamHealth requires mid-levels to treat patients alone, maximizing midlevels' efficiency and profitability. To cover this up, TeamHealth requires its healthcare providers to falsify medical records to reflect a split/shared visit when none actually occurred.
5. TeamHealth accomplishes this cover-up in two ways. First, TeamHealth requires its mid-levels to indicate on medical records that a physician was involved in each patient encounter, when in fact a physician never saw the patient. Second, TeamHealth requires on-duty physicians to sign mid-level medical records, again suggesting that the physician treated the patient. The result is a medical record that appears to indicate that a split/shared visit occurred. TeamHealth then sends these falsified medical records to a coding and billing employee who “relies” on the falsified record to submit claims for reimbursement under the physician's NPI. This results in the mid-level's services being reimbursed at 100% of the physician rate.
6. TeamHealth employs this Scheme through its billing policies and practices to bill federal and state governments for millions of dollars for the services concerned. Through the Scheme, TeamHealth has fraudulently obtained tens of millions of dollars every year since it began employing the Mid-Level Scheme nationwide in or around 2002 (the year the 85% regulation was established).
7. The second Scheme is the “Critical Care Scheme.” This Scheme is a classic upcoding scheme. Under the Critical Care Scheme, TeamHealth bills CMS for “critical care”-the highest level of emergency treatment-when in fact critical care services were not rendered and/or were not medically necessary, thereby submitting false claims through fraudulent billing. Because of the heightened skill and decision-making critical care requires, CMS reimburses providers for critical care services at a significantly higher rate than ordinary emergency services. To capitalize on this upcharge, TeamHealth requires its providers to (1) meet stated critical care quotas each month; (2) falsify critical care on patient medical records when the care they provided did not meet CMS critical care requirements; and/or (3) perform and chart critical care services when those services ...

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