United States of America et al v. Christiana Care Health Services, Inc. et al

COMPLAINT - filed with Jury Demand against Christiana Care Health Services, Inc., Christiana Care Health System, Christiana Hospital, Wilmington Hospital - Magistrate Consent Notice to Pltf. (Filing fee $ 400, receipt number 27536.) - filed by United States of America, State Of Delaware, Ronald Sherman.

District of Delaware, ded-1:2017-cv-00419

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9 PageID #: 1 UNITED STATES DISTRICT COURT DISTRICT OF DELAWARE Plaintiffs, FILED UNDER SEAL v. DO NOT PLACE ON PACER CIVIL ACTION NO. Defendants. JURY TRIAL DEMANDED 9 PageID #: 2 UNITED STATES DISTRICT COURT DISTRICT OF DELAWARE UNITED STATES OF AMERICA and THE STATE OF DELAWARE ex rel. Ronald FILED UNDER SEAL Sherman, DO NOT PLACE ON PACER Plaintiffs, CIVIL ACTION NO. v. JURY TRIAL DEMANDED CHRISTIANA CARE HEALTH SERVICES, INC., CHRISTIANA CARE HEALTH SYSTEM, CHRISTIANA HOSPITAL, and WILMINGTON HOSPITAL, Defendants. 9 PageID #: 3 TABLE OF CONTENTS I. PARTIES ............................................................................................................................... 2 II. JURISDICTION .................................................................................................................... 4 III. SUMMARY OF THE CASE ................................................................................................. 5 IV. APPLICABLE LAW ............................................................................................................. 6 A. The Federal and Delaware False Claims Acts ..................................................................... 6 B. The Anti-Kickback Statute .................................................................................................. 7 C. Violations of the Anti-Kickback Statute Forms the Basis of False Claims Act Liability .............................................................................................................................. 11 D. Delaware Anti-Kickback Statute ....................................................................................... 12 E. The Stark Law .................................................................................................................... 13 F. Corporate Integrity Agreement .......................................................................................... 15 V. PAYMENT UNDER GOVERNMENT HEALTHCARE PROGRAMS ............................ 16 A. Hospital Payments ............................................................................................................. 16 B. Physician Certifications and Payments .............................................................................. 17 C. Relevant Physician Current Procedural Technology ("CPT") Codes................................ 19 1. Neonatology and Pediatric Specific CPT Codes ............................................................ 20 2. Global Bundled Surgical CPT Codes Used in Neurosurgery, Cardiology, Urology, and ENT Departments..................................................................................... 22 D. Billing for Hospitalists, Residents, Physician Assistants ("PA") Nurse Practitioners ("NP") ................................................................................................................................ 27 VI. THE FALSE CLAIMS ACT VIOLATIONS ...................................................................... 28 A. The Kickback And Stark Schemes .................................................................................... 28 1. Christiana Provided Remuneration to Private Physician Groups To Induce Referrals of Patients ....................................................................................................................... 28 a. Remuneration in the Form of Free Services ......................................................... 28 i. Kickbacks from Christiana Hospital NICU to Neonatology Associates ........ 29 ii. Additional, Similar Kickback/Stark Violations Involving the Neurosurgical Unit and the Heart Center........................................................ 36 iii. Additional, Similar Kickback/Stark Violations Involving the Urology and ENT Departments ...................................................................... 39 COUNTS ...................................................................................................................................... 43 i 9 PageID #: 4 RELATOR'S COMPLAINT PURSUANT TO THE FEDERAL FALSE CLAIMS ACT, 31 U.S.C. §§ 3729 ET SEQ. AND THE DELAWARE FALSE CLAIMS AND REPORTING ACT, DEL. CODE ANN. TIT. 6, §§1201 ET SEQ. Plaintiff Ronald Sherman ("Relator") brings this action on behalf of the United States of America and the State of Delaware, against defendants Christiana Care Health Services, Inc., Christiana Care Health System, Christiana Hospital, and Wilmington Hospital (collectively "Defendants" or "Christiana") for violations of the federal False Claims Act ("FCA"), 31 U.S.C. §§ 3729 et seq. and the Delaware False Claims and Reporting Act, Del. Code Ann. tit. 6, §§1201 et seq. I. PARTIES 1. The United States is a plaintiff to this action. The United States brings this action on behalf of the Department of Health and Human Services ("HHS"), the Center for Medicare and Medicaid Services ("CMS"), which administers the Medicare and Medicaid programs, and other federally funded health care programs. 2. Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395- 1395 et seq.; 42 U.S.C. §§ 426 and 426A, establishes the Health Insurance for the Aged and Disabled Program, popularly known as the Medicare Program. Medicare is a government health insurance program for people age 65 or older, certain disabled people under age 65, and people of all ages with end stage renal disease. 3. TRICARE is a federally funded program providing medical benefits to military personnel, their families, retired veterans, and reservists called to duty. See 32 C.F.R. § 19 et seq. 4. The Veterans Administration is a federally funded and administered program which provides medical benefits to military veterans and their dependents. 2 9 PageID #: 5 5. The Medicaid Program, 42 U.S.C. § 1396 et seq., is a government health insurance program funded jointly by the federal and state governments. Each State administers its own Medicaid program; however, each State program is governed by Federal statutes, regulations and guidelines. The federal portion of a State's Medicaid payments - the Federal Medical Assistance Percentage - is based on a States' per capita income compared to the national average. Hereinafter, Medicaid, Medicare, TRICARE, and the Veterans Administration will be referred to as "government healthcare programs." 6. The State of Delaware is a plaintiff to this action. The State of Delaware brings this action on behalf of the Delaware Medical Assistance Program ("Medicaid"). 7. Relator Ronald B. Sherman is a plaintiff to this action. Relator graduated from the State University of New York at Buffalo in 1972 and the University of Maryland in 1976. Relator received his juris doctorate from Brooklyn Law School in 1984. After several years working as an attorney, Relator entered into a non-legal compliance career, becoming a Chief Compliance Officer at Bassett Healthcare in Cooperstown, New York from February 2000 through January 2004. From February 2004 through March 2006, Relator was the Vice President and Chief Compliance Officer at Critical Care Systems International in Nashua, New Hampshire. From August 2007 through December 2014, Relator served as Chief Compliance Officer for defendant Christiana Care Health Systems in Newark, Delaware. As the CCO, Relator held quarterly Management Compliance Committee meetings at Christiana Hospital in Newark, which were attended by Christiana Care executives including the Chief Executive Officer, the Chief Financial Officer, the Chief Medical Officer, and other executives. During the same period, Relator attended the quarterly meetings of the Christiana Board Audit and Compliance Committee, which consisted of several Board members and as well as other consultants chosen by the Board. Prior to each 3 9 PageID #: 6 meeting, Relator would develop and circulate an agenda and other educational materials for Committee Members, as well as prepare the Minutes of the previous meeting, for the Committee's review and acceptance at the beginning of the next meeting. 8. To Relator's knowledge, none of the actionable allegations set forth in this Complaint are based on a public disclosure as set forth in 31 U.S.C. §3730(e)(4) and 6 Del. C. § 1206(b). If such a public disclosure did occur, Relator asserts that he is an original source of the facts alleged in this Complaint. 9. Defendant Christiana Care Health Services, Inc. is a privately-owned, not-for-profit health system that includes two hospitals, Christiana Hospital located at 4755 Ogletown-Stanton Road, Newark, Delaware, 19718 and Wilmington Hospital located at 501 W 14th St, Wilmington, Delaware, 19801. Christiana Hospital is a high risk delivery hospital offering a Level III neonatal intensive care unit ("NICU"). Over 7,200 babies are born at Christiana Hospital each year. In addition to the NICU, Christiana Hospital has other specialty services, including the Helen F. Graham Cancer Center and the Center for Heart & Vascular Health which performs more than 500 open-heart surgical procedures per year, plus thousands of diagnostic and interventional procedures. The Wilmington Hospital is a 241-bed facility that includes, an emergency department, center for rehabilitation, center for advanced joint replacement, outpatient primary care services, diagnostic imaging and medical laboratory services and a surgical center. II. JURISDICTION 10. Jurisdiction is founded upon the federal False Claims Act, 31 U.S.C. § 3729 et seq., specifically 31 U.S.C. § 3732(a) and (b). This Court also has jurisdiction over this action pursuant to 28 U.S.C §§1331 and 1345. Defendants reside within and is doing and/or previously did business within the District. 4 9 PageID #: 7 11. Venue lies in the District pursuant to 31 U.S.C. §3732(a), and 28 U.S.C. §§1391(b) and 1391(c) because a substantial part of the acts complained of herein occurred in this District, including without limitation, acts proscribed by 31 U.S.C. §3729 et seq. III. SUMMARY OF THE CASE 12. In violation of the federal and Delaware False Claims Acts, from prior to 2010 to the present, Defendants knowingly engaged in a scheme to induce doctors to make referrals of patients to Christiana, thereby violating the Federal Fraud and Abuse Anti-Kickback and/or the Prohibited Referral Provisions of 42 U.S.C. §§1320a-7b (hereinafter referred to as the "Anti- Kickback Law" or "AKS"), and the Delaware Anti-Kickback Statute, 31 Del. C. § 1005. When, subsequent to the AKS violations, Defendants submitted bills to government healthcare programs, Defendants violated the FCA and the DE FCA. In addition, because Christiana's payment of in- kind remuneration to private physicians created a financial relationship, Christiana and physicians with these financial relationships with Christiana violated the Stark Law, 42 U.S.C. § 1395nn, when they "referred" patients to Christiana and care for these patients was subsequently billed to government payers. 13. More specifically, starting sometime prior to 2010, Christiana had an exclusive contract with a private outside neonatology group of physicians, Neonatology Associates, whereby the Group would manage all care and procedures in the Neonatal Intensive Care Unit ("NICU") at Christiana Hospital and would subsequently bill a 24-hour global/bundled CPT code to government healthcare programs for the work performed. 14. In violation of the AKS and Stark Law, Christiana provided free services to Neonatology Associates in the form of professional care provided to infants in the NICU by Christiana-employed hospitalists, residents, and nurse practitioners. These Christiana employees provided most of the professional care and procedures in the NICU, while Neonatology Associates 5 9 PageID #: 8 billed for and was reimbursed for that/those care/procedures. Christiana provided these free services in exchange for referrals of patients to Christiana. 15. Similar to the scheme above, during his tenure at Christiana,