Julia Zeman v. USC Unviversity Hospital, No. 2:2011cv05755 - Document 44 (C.D. Cal. 2013)
Court Description: ORDER DENYING DEFENDANTS MOTION TO DISMISS SECOND AMENDED COMPLAINT 39 by Judge Dean D. Pregerson. (lc). Modified on 9/17/2013 (lc).
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Julia Zeman v. USC Unviversity Hospital Doc. 44 1 2 O 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 JULIE ZEMAN, on behalf of the UNITED STATES OF AMERICA, 13 Plaintiff, 14 v. 15 USC UNIVERSITY HOSPITAL, 16 Defendant. ___________________________ ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 11-05755 DDP (MRWx) ORDER DENYING DEFENDANT’S MOTION TO DISMISS SECOND AMENDED COMPLAINT [Dkt No. 39] 17 18 Presently before the court is Defendant USC University 19 Hospital (“the Hospital”)’s Motion to Dismiss Plaintiff’s Second 20 Amended Complaint (“SAC”). 21 the parties and heard oral argument, the court denies the motion 22 and adopts the following order. 23 I. 24 Having considered the submissions of Background Relator Julia Zeman is covered by Medicare. (SAC ¶ 11.) As 25 explained in this court’s earlier orders, the Medicare program 26 provides certain health care benefits to eligible elderly and 27 disabled people. 28 Human Servs., 512 F.3d 1081, 1083 (9th Cir. 2007); Vencor Inc. v. See Maximum Comfort Inc. v. Sec’y of Health and Dockets.Justia.com 1 Nat’l States Ins. Co., 303 F.3d 1024, 1026 (9th Cir. 2002); 2 Alhambra Hosp. v. Thompson, 259 F.3d 1071, 1072 (9th Cir. 2001). 3 Zeman underwent eight outpatient orthopedic surgeries between 4 September 6, 2007 and November 1, 2011. 5 all took place at an Ambulatory Surgical Center (“ASC”) owned and 6 operated by the Hospital, but adjacent to the main hospital 7 facility.1 8 follow-up visits with her surgeons within ninety days of her 9 various procedures. 10 (SAC ¶¶ 3, 13.) (SAC ¶ 16.) The surgeries Zeman occasionally returned for (SAC ¶ 18.) In October 2009, Defendant began to operate the orthopedic 11 practice at the ASC as part of the hospital. 12 time, the Hospital began to charged Plaintiff additional fees of 13 about $95.63 for follow-up “office visits,” “clinic,” and “clinic 14 services”. 15 office visit, however. 16 (SAC ¶¶ 15, 20.) (SAC ¶ 3. After that The Hospital did not bill for every (SAC ¶ 18.) Zeman alleges that these billings were improper because 17 Medicare regulations prohibit charges for follow-up care within 18 ninety days of a major surgery. 19 Zeman filed a qui tam complaint against the Hospital for violations 20 of the False Claims Act, 31 U.S.C. §§ 3729-3733. 21 alleged that the Hospital knowingly presented false or fraudulent 22 claims to Medicare and used false records to get the fraudulent 23 claims approved. (SAC ¶¶ 13-14.) On July 13, 2011, The complaint The government did not intervene.2 This court 24 1 25 26 Though the SAC alleges that the Hospital owned and operated the ASC at all relevant times, the SAC also alleges that Defendant purchased the ASC in April 2009, between Plaintiff’s second and third surgeries. (SAC ¶¶ 3, 16.) 27 2 28 Under the False Claims Act, 31 U.S.C. §§ 3729-3733, a (continued...) 2 1 dismissed Plaintiff’s original complaint and First Amended 2 Complaint, with leave to amend. 3 which the Hospital now moves to dismiss. 4 II. 5 Plaintiff then filed the SAC, Legal Standard A complaint will survive a motion to dismiss when it contains 6 “sufficient factual matter, accepted as true, to state a claim to 7 relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 8 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 9 570 (2007)). When considering a Rule 12(b)(6) motion, a court must 10 “accept as true all allegations of material fact and must construe 11 those facts in the light most favorable to the plaintiff.” Resnick 12 v. Hayes, 213 F.3d 443, 447 (9th Cir. 2000). 13 need not include “detailed factual allegations,” it must offer 14 “more than an unadorned, the-defendant-unlawfully-harmed-me 15 accusation.” 16 allegations that are no more than a statement of a legal conclusion 17 “are not entitled to the assumption of truth.” Id. at 679. 18 other words, a pleading that merely offers “labels and 19 conclusions,” a “formulaic recitation of the elements,” or “naked 20 assertions” will not be sufficient to state a claim upon which 21 relief can be granted. 22 quotation marks omitted). 23 24 Iqbal, 556 U.S. at 678. Although a complaint Conclusory allegations or In Id. at 678 (citations and internal “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly 25 2 26 27 28 (...continued) private party may bring suit, under seal, on behalf of the government as a qui tam relator. If the government elects not to intervene, the case proceeds as a normal civil action. See Aflatooni ex rel United States v. Kitsap Physicians Serv., 314 F. 3d 955, 998 n.2 (9th Cir. 2002). 3 1 give rise to an entitlement of relief.” Id. at 679. 2 must allege “plausible grounds to infer” that their claims rise 3 “above the speculative level.” Twombly, 550 U.S. at 555. 4 “Determining whether a complaint states a plausible claim for 5 relief” is a “context-specific task that requires the reviewing 6 court to draw on its judicial experience and common sense.” 7 556 U.S. at 679. 8 III. Discussion 9 Plaintiffs Iqbal, The issue presented here once again is whether the Hospital 10 violated Medicare’s “global surgery rule.” 11 procedures, Medicare pays surgeons a single amount for all services 12 typically rendered by the surgeon in the time period spanning from 13 one day prior to the surgery to ninety days following the 14 procedure. 15 Postoperative visits related to recovery of the surgery fall within 16 this “global surgical package.” 17 Chapter 12, § 40.1A. 18 For major surgical 77 Fed. Reg. 68892, 68911 (Nov. 16, 2012). Medicare Claims Processing Manual, Other hospital-provided outpatient services, however, fall 19 under a different framework. 20 2010) (“The O[utpatient] P[rospective] P[ayment] S[ystem] includes 21 payment for most hospital outpatient services[.]” 22 physician fee schedules are separate from, and have no bearing 23 upon, the OPPS. 24 “provision for hospital outpatient services analogous to the global 25 period affecting payments for professional services made under the 26 Medicare physician fee schedule.” 27 7, 2000). 75 Fed. Reg. 71800, 71806 (Nov. 24, Id. at 71870. Medicare’s OPPS does not include any 65 Fed. Reg. 18434, 18448 (Apr. 28 4 1 The Hospital argues that the global surgery rule applies only 2 to surgeons, not to “facility fees” charged under OPPS for 3 outpatient clinic services such as those Zeman received from the 4 Hospital. 5 the one hand, Plaintiff contends that the “facilities fees” charges 6 here are merely “a guise to improperly collect for professional 7 services rendered by its physicians.” 8 same time, however, Plaintiff appears to argue that facilities fees 9 themselves cannot be billed under OPPS.3 (Motion at 10.) Plainitiff’s response is unclear. SAC ¶ 18, Opp. at 4. On At the (Opp. at 4 (“Defendant . 10 . . fails to offer any applicable authority to charge an undefined 11 ‘facility charge’,” 6 (“Defendant offers no legal authority for an 12 exception to this exclusion for ‘facility fees’ for post-operative 13 visits with the physician, in the physician’s office.”), 7 (“It is 14 illogical to think that the hospital could collect a separate 15 facility fee for every post-operative visit made by patients . . . 16 .”). 17 A. OPPS Allows for Facilities Fees Charges 18 Plaintiff provides no authority for the proposition that OPPS 19 excludes payments for facilities fees. 20 of services that are explicitly excluded from OPPS does not include 21 facilities fees. 22 noted by the court, the Medicare Claims Processing Manual 23 specifically explains “facility charges[s]” provided in connection 24 with the clinic services of a physician: 42 C.F.R. § 419.22. To the contrary, the list Furthermore, as previously 25 26 3 27 28 To the extent Plaintiff contends that any post-operative charges for clinic visits constitute charges for physicians’ services by definition, she is mistaken, for the reasons discussed infra. 5 1 2 3 4 5 “[W]hen a beneficiary receives clinic services from a hospital-based physician, the physician . . . would be reimbursed at the facility rate of the Medicare physician fee schedule – which does not include overhead expenses. The hospital historically has submitted a separate part B ‘facility charge’ for the associated overhead expenses . . . . The hospital’s facility charge does not involve a separate service . . . ; rather, it represents solely the overhead expenses associated with furnishing the professional service itself.” 6 MCPM Chapter 6, § 20.1.1.2. While this description is set forth in 7 Chapter 6 of the MCPM, which concerns Skilled Nursing Facilities, 8 that fact does not affect its reasoning or impair its explanatory 9 power. Section 20.1.1.2 explains facilities charges for the 10 purpose of illustrating why such charges are excluded from skilled 11 nursing facility consolidated billing schedules. In doing so, 12 Section 20.1.1.2 analogizes to the physician fee schedule which, as 13 described above, is completely different from OPPS. Section 14 20.1.1.2 therefore refutes Plaintiff’s unsupported assertion that 15 OPPS does not allow for facilities fee charges.4 See also Quick 16 Facts About Payment for Outpatient Services for People with 17 Medicare Part B, Centers for Medicare & Medicaid Services, January 18 2010, http://www.medicare.gov/Pubs/pdf/02118.pdf (“Part B services 19 paid for under this system include . . . [t]he hospital charge for 20 21 22 4 23 24 25 26 27 28 Section 20.1.2.2 further states that “hospitals bill for ‘facility charges’ under . . . codes in the range of 99201-99245. The court notes that the bills at issue here utilized code 99211, which falls within this “facility charge” range. (SAC ¶ 20). The MCPM itself acknowledges that these codes “were designed to reflect the activities of physicians and do not describe well the range and mix of services provided by hospitals during visits of clinic and emergency department patients.” MCPM Chapter 4, § 160. Nevertheless, the MCPM directs providers to apply their own guidelines to existing code designations “[w]hile awaiting the development of a national set of facility-specific codes and guidelines.” Id. 6 1 an emergency department or hospital clinic visit (doesn’t include 2 an amount for the doctor’s services).” (emphasis added)). 3 B. Allegations Regarding Designation of Charges 4 Defendant further contends that because it is permitted to 5 charge facility fees under OPPS, Plaintiff has failed to plausibly 6 or adequately allege that the hospital billed improperly. 7 at 3.) 8 that Plaintiff was charged not for “facility fees,” but rather for 9 services labeled “clinic,” “clinic services,” or “office visit.” The court disagrees. (Reply As an initial matter, the SAC alleges 10 SAC ¶ 20. 11 visits entailed and whether physicians’ services falling under the 12 90-day rule bar were provided. 13 these additional, supposed facility fee charges were only assessed 14 after some, but not all, of Plaintiff’s post-operative visits, and 15 that such charges were levied more often than not for visits within 16 the 90-day period. 17 Plaintiffs allegations that the charges were not for uniform, 18 overhead expenses, but rather service fees in disguise. 19 Lastly, Plaintiff alleges that while the Hospital began charging 20 facility fees in October 2009, there was no contemporaneous 21 increase in the Hospital’s overhead expenses that would justify the 22 imposition of a new charge. 23 whether the earlier fee included any facility charge, or whether 24 such charges were billed by some other entity, those too are 25 questions best resolved on summary judgment. 26 allegations comprise more than a naked assertion that the Hospital 27 intentionally mislabeled its bills. 28 /// At this stage, it is unclear to the court what these (SAC ¶ 18.) Furthermore, Plaintiff alleges that These irregularities support (SAC ¶ 15.) 7 While it is unclear Plaintiff’s 1 2 3 IV. Conclusion For the reasons stated above, Defendant’s Motion to Dismiss the SAC is DENIED. 4 5 IT IS SO ORDERED. 6 7 8 Dated: September 16, 2013 DEAN D. PREGERSON United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8
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