United States ex rel. Fabula v. American Medical Response Inc.

          RULING ON MOTION FOR SUMMARY JUDGMENT AND RELATED MOTIONS

          MICHAEL P. SHEA, U.S.D.J.

         I. Introduction

         Plaintiff-Relator Paul Fabula brings this action under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., against Defendant American Medical Response, Inc. (“AMR”). He brings a claim on behalf of the United States for false claims in violation of § 3729(a)(1)-(2) and a claim on his own behalf for retaliation in violation of § 3730(h). AMR has filed a motion for summary judgment on all claims, ECF No. 144, as well as a motion to exclude the testimony and report of one of Fabula's experts, ECF No. 143. Fabula has filed a motion asking the Court to deny or defer ruling on summary judgment until he has had the opportunity to take more discovery. ECF No. 157; see Fed. R. Civ. P. 56(d). For the reasons set forth below, AMR's motion for summary judgment is GRANTED in part and DENIED in part, Fabula's motion to deny or defer ruling on summary judgment is DENIED, and AMR's motion to exclude Fabula's expert is DENIED as moot.

         II. Procedural History

         I assume familiarity with the allegations in the Fourth Amended Complaint and the Second Circuit's opinion remanding this case. United States ex rel. Chorches for Bankr. Estate of Fabula v. Am. Med. Response, Inc., 865 F.3d 71 (2d Cir. 2017). I summarize the procedural history to provide additional context for the discussion that follows.

         Paul Fabula filed this qui tam action against AMR as a relator on behalf of the United States on June 22, 2012. ECF No. 1. The United States gave notice that it declined to intervene on September 27, 2013. ECF No. 18. Fabula filed a second amended complaint (“SAC”), bringing a claim on behalf of the United States for violations of the FCA, 31 U.S.C. §§ 3729(a)(1) and (a)(2), and a claim on his own behalf alleging that AMR retaliated against him for refusing to assist in submitting a false claim, 31 U.S.C. § 3730(h). AMR moved to dismiss, arguing that the complaint did not state a claim for relief and that Fabula lacked standing to pursue his claims because he had filed for bankruptcy and the claims belonged to the bankruptcy estate. I dismissed Fabula's retaliation claim because I concluded that he had not alleged facts suggesting that he engaged in “efforts to stop 1 or more violations” of the FCA. See 31 U.S.C. § 3730(h). I also dismissed his FCA claim for lack of standing, but I stayed my decision to give the trustee of his bankruptcy estate an opportunity to join the case and pursue the claim. ECF No. 67.

         The trustee of Fabula's bankruptcy estate, Chorches, joined the case and, on April 24, 2015, filed a Third Amended Complaint (“TAC”) alleging violations of the FCA. AMR moved to dismiss the TAC for failure to state a claim, and I granted the motion on November 6, 2015. ECF No. 82. I concluded that the complaint did not satisfy the pleading standard in Fed.R.Civ.P. 9(b) because it did not allege with specificity that AMR had submitted false claims to the government for payment.

         July 27, 2017, the Second Circuit vacated the dismissal of both claims, holding that the SAC stated a retaliation claim and that the TAC stated a claim under the FCA. See Chorches, 865 F.3d 71. With respect to the FCA claim, the court held that the TAC satisfied the standard in Rule 9(b) because information about whether individual ambulance runs were billed to the government was “peculiarly within the knowledge of AMR, ” id. at 82, and the TAC had otherwise alleged “facts supporting a strong inference of fraud, ” id. at 83. With respect to the retaliation claim, the court held that the TAC had adequately pled that Fabula engaged in protected activity by alleging that he refused to falsify a single record that he believed would later form the basis of a false claim. Id. at 96-97

         On appeal, AMR argued that the TAC was “an unjustified ticket to discovery, ” and that it might face undue pressure to settle the case to avoid significant litigation costs. Id. at 87. Responding to these concerns, the Second Circuit noted that the TAC had included specific allegations about several ambulance “runs” for which Fabula was directed to create false records. The court explained that these allegations were “amenable to a targeted discovery process that could lead to a swift resolution of the lawsuit . . . .” Id. The court elaborated:

Where a qui tam relator identifies representative examples of false claims or, as here, makes allegations leading to a strong inference that specific false claims were submitted, defendants could initially be required to provide discovery only with respect to the cases identified in the complaint. If no genuine dispute of material fact is found to exist as to whether false claims were in fact submitted in that limited set of cases, the lawsuit would be at or near its end. See [U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 191 (5th Cir. 2009)] (“discovery can be pointed and efficient, with a summary judgment following on the heels of the complaint if billing records discredit the complaint's particularized allegations.”). If the initial inquiry produces evidence that seems to bear out the complaint's assertions, however, the door could be open to broader discovery without fear of subjecting an innocent defendant to burdensome and unjustified inquiries. See TAC ¶¶ 110, 114 (stating that false claims not specifically alleged “can be readily identified by, and from, the existence of multiple versions of electronic PCRs for any particular run that has been submitted to Medicare for payment”).

Chorches, 865 F.3d at 88 n.13.

         On remand, the parties seized on this suggestion. See ECF No. 99 at 7 (“The parties agree that discovery in this matter should be bifurcated and phased as endorsed by the Second Circuit. . . .”). I adopted their request and bifurcated discovery. ECF No. 102. In Phase I, I ordered that discovery would be limited to “(1) the specific claims and ambulance runs identified in the operative Complaint; (2) Fabula's retaliation claim; and (3) whether Mr. Fabula is judicially estopped from recovering on the False Claims Act claims . . . .” Id. at 1. I also limited dispositive motions following Phase I to those three topics. Id.

         Fabula then sought leave to file a Fourth Amended Complaint to (1) substitute Fabula for Chorches as relator, since Fabula's bankruptcy proceeding had concluded; (2) join the retaliation claim, previously set forth in the SAC, with the FCA claim into a single complaint; and (3) make “some additional, non-substantive ‘clean-up' changes.” ECF No. 106; ECF No. 113. I granted the motion to amend, ECF No. 115, and Fabula's Fourth Amended Complaint, ECF No. 105, became the operative complaint.

         III. Facts Developed in Phase I Discovery

         The following facts are taken primarily from the parties' Local Rule 56(a) statements and are undisputed unless otherwise noted.

         A. Patient Care Reports (PCRs) and the MEDS software

         Fabula was employed as an Emergency Medical Technician (“EMT”) with Defendant AMR, an ambulance service provider, from 2010 through the end of 2011. Local Rule 56(a)(1) Statement (“56(a)(1) Stmt.”)., ECF No. 151 ¶ 3. Fabula's responsibilities included transporting patients as a member of an ambulance crew and documenting those transports by completing Patient Care Reports (“PCRs”). Id. ¶ 4.

         Each ambulance transport or “run” included a crew of two EMTs or one paramedic and one EMT. Id. ¶ 10. One crew member drove the ambulance, and the other provided patient care. Id. ¶ 11. The crew member providing care was responsible for completing a PCR using AMR's proprietary system called the Multi-EMS Data System (“MEDS”). Id. ¶¶ 11, 14. Crew members completed PCRs on MEDS by answering a series of questions on dropdown menus and filling in narratives in free form text boxes. Id. ¶¶ 13, 15. PCRs included information such as patient demographics, medical condition, treatment provided, and the time and location of the run. Id. ¶¶ 12-13.

         One specific piece of information contained in each PCR was whether crew members performed an Advanced Life Support (“ALS”) Assessment and whether they performed ALS-level services. Id. ¶ 16. Medicare regulations define an ALS assessment as “an assessment performed by an ALS crew as part of an emergency response that was necessary because the patient's reported condition at the time of dispatch was such that only an ALS crew was qualified to perform the assessment. An ALS assessment does not necessarily result in a determination that the patient requires an ALS level of service.” 42 C.F.R. § 414.605. Fabula alleges that AMR instructed crew members to enter on the PCR that an ALS Assessment had been performed any time a paramedic was on the crew. 56(a)(1) Stmt., ECF No. 151 ¶ 16. AMR disputes this allegation and contends that the ALS Assessment section was not automatically populated in PCR reports and that the section could only be completed by a crew member. Id.

         When a crew member completed a PCR, he or she submitted it electronically to AMR's MEDS server. Id. ¶¶ 19-20. AMR asserts that PCRs that were submitted could no longer be altered in any way, including by the crew members who submitted them. Id. (citing MEDS 2 Manual, ECF No. 146-48 at 5). Crew members could provide additional or corrected information only by completing an addendum, a separate document that was electronically attached to the original PCR. 56(a)(1) Stmt., ECF No. 151 ¶¶ 22, 30.

         Fabula contends that the MEDS system changed while he was employed by AMR. Fabula Decl., ECF No. 153 ¶ 15.^[1] The “MEDS 2” system was in place when he joined the company and for the “bulk of [his] time at AMR.” Id. Using the MEDS 2 system, Fabula states that crew members could supplement or correct PCRs and resubmit them after the initial submission. Id. He asserts that AMR subsequently transitioned to “MEDS 3, ” and, under the new system, PCRs were locked to editing after they were submitted. Id. Fabula also states that crew members could “park” PCRs and edit them later before submitting them to the MEDS server. Id. ¶ 8. AMR disputes Fabula's recollection. It cites portions of the MEDS 2 manual indicating that PCRs cannot be altered once they are finalized. MEDS 2 Manual, ECF No. 146-48 at 5 (“Once the PCR is locked, you can only preview or transmit the PCR. If additional information needs to be added to the PCR, an Addendum must be completed.”).

         B. Physician Certification Statements (PCSs)

         AMR documents state that a Physician Certification Statement (“PCS”) “is required when we transport a Medicare patient in a non-emergency situation where the patient is under the direct care of a physician.” ECF No. 152-9 at 17. The documents also state that the PCS “supports the medical reason why an ambulance was the correct level of transportation” and was “reasonable and necessary.” Id. at 16. Information on the PCS regarding a patient's medical condition “must be completed by the physician or authorized clinician, ” which includes registered nurses and nurse practitioners. Id. at 26-28. For the transport of “repetitive patients”- patients requiring “three or more ambulance transports during a 10-day period OR one transport per week for a minimum of three weeks for treatment of the same condition”-Medicare requires a PCS signed by a physician (not another authorized clinician) and obtained before the ambulance transport is provided. Id. at 23-24. “Once signed, however, a repetitive patient PCS can be used for 60 days when the patient is transported for the same condition.” Id.; see also 42 C.F.R. § 410.40(d)(2).

         C. AMR's Billing Procedures

         After a crew member completed and submitted a PCR, MEDS automatically forwarded it to the Transportation Authorization Department (“TAD”). 56(a)(1) Stmt., ECF No. 151 ¶ 26. TAD reviewed each PCR, and if it identified any issues, sent notes with clarifying questions or requests for addenda to the crew member who completed it. Id. ¶ 27. Fabula contends that another department, Patient Business Services (“PBS”), also regularly reviewed PCRs and provided comments and questions for TAD to pass on to crew members. 56(a)(2) Stmt., ECF No. 151 ¶ 2. When a crew member received a question or comment from TAD or PBS, he or she could create an addendum to provide additional or corrected information. 56(a)(1) Stmt., ECF No. 151 ¶ 29. AMR asserts that crew members who received a request for clarification or additional information but who could not recall the underlying run were permitted to complete an addendum stating that “no further medical necessity” or “no further information” could be provided. Id. Fabula testified that his supervisors told him he could not indicate he did not remember the patient, and that he “need[ed] to put something in there.” Fabula Dep., ECF No.152-1 at 46. He acknowledged that he was told by field training officers that he could write “no further medical necessity” if he did not recall additional information about a patient. Fabula Dep., ECF No. 145-1 at 32.

         Once the internal review of a PCR was complete, PBS determined if the run was billable and to whom. 56(a)(1) Stmt., ECF No. 151 ¶ 45. If it determined a run was billable, PBS submitted a claim for reimbursement. Id. PBS prepared bills for Medicare and Medicaid, as well as private payors and direct bills to patients. Id. ¶ 47. In some instances, AMR billed Medicare even though it knew the claim would be denied so that it could seek payment from a secondary payor such as the patient's private insurance. Id. ¶¶ 49-50. In these cases, it sometimes used “denial modifiers.” Id. ¶¶ 49, 51. “The GY denial modifier notified CMS that the run was not medically necessary based on the documentation.” Id. ¶ 51. “The GZ modifier notified CMS that AMR was unsure whether the runs were medically necessary and left the ultimate assessment up to CMS.” Id. Fabula states that AMR could and did appeal the denial of claims that were submitted using GY and GZ modifiers. 56(a)(2) Stmt., ECF No. 151 ¶ 31; Adams Expert Report, ECF No. 145-13 at 15. Fabula also asserts that, on at least one occasion, Medicare paid a claim that AMR submitted with a GZ modifier without the need to appeal. 56(a)(2) Stmt., ECF No. 151 ¶ 33; Adams Expert Report, ECF No. 145-13 at 15.

         D. Ambulance Runs Identified in the Complaint

         The Fourth Amended Complaint identifies several specific ambulance runs or sets of runs that Fabula contends were falsified at AMR's direction or otherwise improperly billed to Medicare. Fourth Am. Compl. (FAC), ECF No. 105 ¶¶ 88-94, 99, 100. Phase I discovery with respect to Fabula's FCA claims was limited to these specific runs. See Discovery Ruling, ECF No. 138 (discussing the scope of Phase I discovery as limited to the “specific claims and ambulance runs identified in the operative Complaint”).^[2] I summarize the allegations in the complaint and the evidence developed with respect to each of these runs (the “Complaint Ambulance Runs”) below, organized according to the paragraph in the Fourth Amended Complaint that addressed them.^[3]

         1. Paragraph 88: December 16, 2011 Run

         a) Allegations in the Fourth Amended Complaint

         Fabula alleged that, on December 16, 2011, AMR dispatcher Paul Zadrozny contacted him to ask whether he wanted to work on a long-distance patient transfer from New Haven, CT, to Guilford, CT. FAC, ECF No. 105 ¶ 88. Zadrozny told Fabula that he would be required to complete paperwork to ensure that Medicare would reimburse AMR for the transfer. Id. AMR allegedly “wanted” Fabula to write that the patient could not sit at ¶ 90-degree angle due to a hip fracture, even though “the patient had already fully recovered.” Id.

         b) Facts Developed in Phase I Discovery

         AMR asserts that it was unable to identify any records matching this description. Supplemental Responses to Relator's First Set of Interrogatories (“Supplemental Responses”), ECF No. 145-10 at 3-4. Nor was it able to find potentially relevant records using expanded search criteria. Id.

         2. Paragraphs 89 and 90: December 14, 2011 Runs

          a) Allegations in the Fourth Amended Complaint

         Fabula alleged that he was partnered with paramedic Amy Baitch for two runs on December 14, 2011. Fourth Amended Complaint, ECF No. 105 ¶ 89. Both runs were routine scheduled patient transports, and neither patient required an ambulance. Id. ¶¶ 89-90. AMR falsely dispatched the ambulance as a “911” call so that it could bill Medicare for the transports. Id.

         b) Facts Developed in Phase I Discovery

         AMR represents that it was unable to identify any PCRs matching these calls. Supplemental Responses, ECF No. 145-10 at 4. It reports that it identified only one date in 2011 (August 11, 2011) on which Fabula was partnered with Amy Baitch, and the pair submitted only one PCR designated as a 911 call, which involved a patient who had been in a car accident. Id.

         3. Paragraph 91: December 7, 2011 Run

          a) Allegations in the Fourth Amended Complaint

         Fabula alleged that he was suspended for one day on December 7, 2011, for failing to complete three “parked” PCRs for ambulance runs in May. FAC, ECF No. 105 ¶ 91. AMR allegedly provided him with information to include in the forms and would not allow him to return from suspension unless he completed them. Id.

         b) Facts Developed in Phase I Discovery

         AMR asserts that it does not have record of any “parked” PCRs from the relevant days. AMR produced an “Employee Suspension Notice” dated December 3, 2011 notifying Fabula that he would be suspended for one day on Monday, December 5, 2011 for “parked PCR issues” in violation of AMR's standard operating procedures. ECF No. 146-44. The notice indicates the “Infraction Date” was November 30, 2011, and states that Fabula had received warnings on May 22, 2011 and October 5, 2011. Id.

         4. Paragraphs 92 and 99: Patient JC Runs ^[[4]]

         a) Allegations in the Fourth Amended Complaint

         Fabula alleged that he was involved in several runs for patient JC, a “grossly overweight man” with diabetes. FAC, ECF No. 105 ¶¶ 92, 99. JC allegedly called 911 for an ambulance six dozen times in 2011. Id. ¶ 99. AMR directed Fabula to “change and falsely certify the electronic entry of” PCRs indicating that “[JC] had difficulty remaining in an upright position in order to qualify [JC]'s runs in the ambulance for Medicare/Medicaid reimbursement.” Id. The Fourth Amended Complaint describes a specific ambulance run for JC on December 4, 2011. Id. ¶ 92. That day, Fabula was allegedly partnered with EMT Douglass Gladstone. Id. Gladstone and Fabula assisted in transporting JC to a hospital. The patient had no medical need to go to the hospital, “he simply wanted to go there.” Id. AMR directed Fabula to list JC's prior surgeries to justify the transport even though the patient was “able to walk himself to the stretcher[] and climb on unassisted.” Id.

         b) Facts Developed in Phase I Discovery

         AMR produced 71 PCRs for patient JC from 2011.^[5] Of those, six included addenda. See ECF Nos. 146-11 through 146-16. Fabula authored two of the 71 PCRs that AMR produced. Fabula Decl., ECF No. 153 ¶ 51. He was not a crew member on any of the calls with addenda. See ECF Nos. 146-11 through 146-16. He asserts, however, that AMR has failed to produce all of the relevant records for JC. Fabula Decl., ECF No. 153 ¶¶ 50-53. AMR's submissions suggest that it transported patient JC on 133 occasions in 2011. See Billing Summary, ECF No. 146-21 at 2, 5, 8, 11 (billing summary spreadsheet listing 133 separate transport dates for JC; see also Adams Expert Report, ECF No. 145-13 at 17 n. 9 (“It is also worth noting that AMR transported Patient JC 133 times in 2011.”). The summary sheet shows that 71 of the 133 total transports were submitted for reimbursement to Medicare, Medicaid, or both. Billing Summary, ECF No. 146-21 at 3, 6, 9, 12 (columns H and I listing the payor to whom each claim was submitted).

         Fabula asserts that AMR improperly billed Medicare for 23 of JC's transports. See Berry Expert Report, ECF No. 154 at 8-9 (explaining that 25 runs for JC were improperly billed); ECF No. 150 at 21 n.15 (noting that Fabula's expert later agreed that two of those runs were properly billed). He cites the report of Peter Berry, whom he has disclosed as a billing expert. Mr. Berry explains that he determined that AMR billed for Advanced Life Support (“ALS”) services when runs were initiated by 911 calls. Berry Expert Report, ECF No. 154 at 9. The PCRs for JC's runs do not include documentation of an ALS assessment or intervention, and Mr. Berry asserts that the fact that the runs were initiated by 911 calls does not, on its own, support billing at the ALS level. Id. Fabula asserts that AMR trained crew members to indicate that an ALS assessment was conducted any time a paramedic was on the run, even if the paramedic did not actually complete an assessment. Fabula Decl., ECF No. 153 ¶¶ 42-44. He also asserts that MEDS 2 required crew members to report that an ALS assessment had been performed any time a paramedic was on the run regardless of whether the assessment was actually performed. Id. (“[F]or a certain period of time beginning with the roll-out of the new documentation protocol, the PCR software was set up such that you could not move past the dispatch section without having checked yes [indicating an ALS assessment was performed] if a paramedic was on the run.”). AMR's billing expert agrees that “10 transports for Patient JC met medical necessity for ambulance transport but do not appear to meet the standard for ALS billing, although BLS billing would have been appropriate.” Adams Expert Report, ECF No. 145-13 at 21.

         5. Paragraph 93: October 17, 2011 Run

         a) Allegations in the Fourth Amended Complaint

         Fabula alleged that he transported a patient from a nursing home to a health center on October 17, 2011. FAC, ECF No. 105 ¶ 93. The transport was cancelled en route to the health center because the crew was informed that the patient did not have an appointment that day. Id. The patient never left the ambulance. Id. AMR nevertheless directed Fabula to complete two PCRs as if the crew had transported the patient to and from the appointment. Id. Fabula's supervisor also directed him to have the nurse at the nursing home “sign twice, ” thereby “trick[ing her] into signing as though she was receiving the patient at the health center.” Id.

         b) Facts Developed in Phase I Discovery

         AMR identified two PCRs that matched the description in the Fourth Amended Complaint. The first PCR indicates the crew arrived at the patient's side at 8:53 AM on October 17, departed for the health center at 9:22 AM, and arrived there at 9:52 AM. ECF No. 146-3 at 2. The “Narrative” section states

pt transferred from [redacted] to [redacted] for a ct scan. pt needs ambulance due to severe bed sore on buttocks and need for o2 for copd. Pt had no complaints during transport and vitals remained within normal limits. upon arrival to facility for pts ct scan this facility stated they have no record of this pt having an appointment today, and they cannot take this pt at this time. The facility from which the patient is from booked the ambulance for this transport but did not make the appointment for the ct scan. The pt never left the ambulance and did not make contact with the ct scan facility. Pt was transported back to the original facility where pt care was transferred over to staff.

Id. at 3. The “Facility Signature” section includes a signature from “melissa, ” as the “Receiving Facility Representative.” Id. at 6. The name and location of the facility are redacted. Id.

         The second PCR indicates the crew was at the patient's side at 9:53 AM, they departed for the nursing home at 9:52 AM, and arrived at 10:46 AM. ECF No. 146-4 at 2. The “Narrative” section states:

pt transferred to [redacted] from [redacted]. Pt needs ambulance due to severe bed sore on buttocks and need for o2 for copd. Pt had no complaints during transport and vitals remained within normal limits. Pt was transported back to original facility where pt care was transferred over to staff.

Id. The “Facility Signature” section includes a signature from “melissa” as the “Receiving Facility Representative, ” and the name and location of the facility are again redacted. Id. at 6.

         AMR submitted bills to Medicaid for both October 17, 2011 ambulance runs, and both bills were paid. See AMR Payment Records, ECF No. 152-7 at 64-65 (AMR records showing Medicaid payment of $218.82 for each run).^[6] Fabula contends that these bills were fraudulent because AMR should have billed Medicaid for only one run. 56(a)(2) Stmt., ECF No. 151 ¶¶ 12- 14.) AMR contends that it was appropriate to submit two bills under Medicaid billing rules. See Reply Br., ECF No. 165 at 8.

         6. Paragraph 94: ...