United States of America et al v. Biotelemetry, Inc. et al

SECOND AMENDED COMPLAINT against BIOTELEMETRY, INC., CARDIONET, LLC, filed by JOHN DOE, JACK DOE. (Main Document 36 replaced on 4/2/2019).

Eastern District of Pennsylvania, paed-2:2018-cv-01688

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2 EXHIBIT A 2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA UNITED STATES OF AMERICA,) ex rel.)) Civil A. No. 18-1688-PD [UNDER SEAL])) v.) FILED UNDER SEAL) Pursuant to 31 U.S.C. §3730(b)(2) [UNDER SEAL])) JURY TRIAL DEMANDED SECOND AMENDED COMPLAINT FOR DAMAGES AND OTHER RELIEF UNDER THE QUI TAM PROVISIONS OF THE FALSE CLAIMS ACT AND SIMILAR STATE PROVISIONS Brian J. McCormick, Jr., Esquire ROSS FELLER CASEY, LLP One Liberty Place 1650 Market St., 34th Floor Philadelphia, PA 19103 215-574-2000 bmccormick@rossfellercasey.com Attorneys for Relators 2 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF PENNSYLVANIA United States of America,) and the States of Arkansas, California,) Colorado, Connecticut, Delaware, Florida,) Civil Action No. 18-1688-PD Georgia, Hawaii, Illinois, Indiana, Iowa,) Louisiana, Maryland, Massachusetts,) Michigan, Minnesota, Montana, Nevada,) FILED UNDER SEAL New Jersey, New Mexico,) Pursuant to 31 U.S.C. §3730(b)(2) New York, North Carolina, Oklahoma,) Rhode Island, Tennessee, Texas, Virginia,) Washington, Wisconsin and the District) JURY TRIAL DEMANDED of Columbia, and the Cities of Chicago and) New York)) Plaintiffs,)) ex rel. John Doe and Jack Doe,) DO NOT POST ON PACER) Relators,)) v.)) BioTelemetry, Inc. and CardioNet, LLC,))) Defendants.) SECOND AMENDED COMPLAINT FOR DAMAGES AND OTHER RELIEF UNDER THE QUI TAM PROVISIONS OF THE FALSE CLAIMS ACT AND SIMILAR STATE PROVISIONS 1. This is an action, brought by Relators John Doe and Jack Doe (collectively, "Relators"), to recover damages and civil penalties on behalf of the United States of America, and numerous state and local governments arising out of false claims and records presented to the United States and to the States, the District of Columbia, and the Cities of Chicago and New York (the "Qui Tam States") by Defendants BioTelemetry, Inc. and CardioNet, LLC (collectively, "Defendants"). 2 2 2. This action arises under the provisions of Title 31 U.S.C. §3729 et seq., popularly known as the False Claims Act (the "FCA"), and pursuant to analogous provisions of state and local law, including, but not limited to the following: Arkansas Medicaid Fraud False Claims Act, Ark. Code Ann. § 20-77-901 California False Claims Act, Cal. Gov't Code § 12651 et seq. California Insurance Frauds Prevention Act, California Insurance Code § 1871.7 et seq. Colorado Medicaid Assistance Act, Rev. Stat. § 25.5-4-304 et seq. Connecticut False Claims Act, Chapter 319v § 17b-301a et seq. Delaware False Claims and Reporting Act, Del. Code Tit. 6, § 1201 et seq. Florida False Claims Act, Fla. Stat. § 68-081 et seq. Georgia False Medicaid Claims Act, Ga. Code § 49-4-168 (2007) Hawaii False Claims Act Against the State, Haw. Rev. Stat. § 661-21 et seq. Illinois False Claims Act and Whistleblower Reward and Protection Act, 740 Ill. Comp. Stat. 175/1 et seq. Illinois Insurance Claims Frauds Prevention Act, 740 Ill. Comp. Stat. § 92 Indiana False Claims and Whistleblower Protection Act, Ind. Code § 5-11-5.5 et seq. Iowa False Claims Act, Iowa Code § 685.1 et seq. Louisiana Medical Assistance Programs Integrity Law, La. Rev. Stat. § 46:437.1 et seq. Maryland False Claims Act, Md. Code Ann., Health-Gen. § 2-6-1 et seq. Massachusetts False Claims Act, Mass Laws Ch. 12, § 5(A) et seq. Michigan Medicaid False Claims Act, Mich. Comp Laws Serv. § 400.601 et seq. Minnesota False Claims Act, Minn. Stat. § 15C.01 et seq. Montana False Claims Act, Mont. Code § 17-8-401 et seq. Nevada Submission of False Claims to State or Local Government Act, Nev. Rev. Stat. § 357.010 et seq. New Jersey False Claims Act, N.J. Stat. § 2A:32C-1 et seq. New Mexico Medicaid False Claims Act., N.M. Stat § 27-14-1 et seq. New York False Claims Act, N.Y. St. Fin. Law § 187 et seq. North Carolina False Claims Act, N.C. Gen. Stat. § 1-605 et seq. Oklahoma Medicaid False Claims Act, 63 Okla. St. § 5053 et seq. Rhode Island False Claims Act, R.I. Gen. Laws § 9-1.1-1 et seq. Tennessee False Claims Act, Tenn. Code § 4-18-101 et seq. Tennessee Medicaid False Claims Act, Tenn. Code § 71-5-181 et seq. Texas Medicaid False Claims Act, Tex. Hum. Res. Code § 36.001 et seq. Virginia Fraud Against Taxpayers Act, Va. Code § 8.01-216.1 et seq. Washington Medicaid Fraud False Claims Act, RCW 74.66.020 Wisconsin False Claims Act, Wis. Stat. § 20.931 et seq. District of Columbia False Claims Act, D.C. Code § 2-308.13 et seq. City of Chicago False Claims Ordinance, Mun. Code, § 1-22-010 et seq. City of New York City False Claims Act, Adm. Code § 7-801 et seq. (collectively, "State False Claims Acts"). 3 2 3. These false or fraudulent claims for reimbursements were submitted, or caused to be submitted, by Defendants to government-funded healthcare programs including, without limitation, Medicare, Medicaid, the Federal Employees Health Benefits Program, TRICARE/CHAMPUS, and the Veterans Administration 1 for the utilization of external, ambulatory telemetry cardiac monitoring devices and/or related services. I. JURISDICTION AND VENUE 4. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331 and 31 U.S.C. § 3732(a), which specifically confer jurisdiction to this Court over actions brought pursuant to 31 U.S.C. §§ 3729 and 3730. 5. This Court has supplemental subject matter jurisdiction over Defendants' violations and the counts relating to the State False Claims Acts pursuant to 28 U.S.C. § 3732(b) because Defendants' violations of the State False Claims Acts and/or the federal FCA arise out of a common nucleus of operative fact. See also 31 U.S.C. § 3732(b) (granting district court jurisdiction over any action brought under the laws of any state for the recovery of funds paid by a state if the action arises from the same transaction or occurrence as an action brought under the federal FCA). 6. This Court has personal jurisdiction over the Defendants pursuant to 31 U.S.C. § 3732(a) because acts prohibited by 31 U.S.C. § 3729 occurred in this state and this judicial district. 7. Venue is proper in this District pursuant to 31 U.S.C. § 3732(a) and 28 U.S.C. § 1391(b)-(c) because Defendants transact business within this District and because acts proscribed by 31 U.S.C. § 3729 occurred within this District. 1 These government-funded healthcare programs are collectively referred to as "Government Healthcare Programs." 4 2 II. PARTIES 8. Relator John Doe is a citizen of the United States. He is familiar with the Defendants' business operations. Further details regarding Relator John Doe and his knowledge have been and will be provided to the United States and the Qui Tam States. 9. Relator Jack Doe is a citizen of the United States. He is familiar with the Defendants' business operations. Further details regarding Relator Jack Doe and his knowledge have been and will be provided to the United States and the Qui Tam States. 10. Defendant BioTelemetry, Inc. ("BioTelemetry"), formerly known as CardioNet, Inc., is a mobile and wireless medical technology company. BioTelemetry is a corporation organized and existing under the laws of the State of Delaware, having its principal place of business at 1000 Cedar Hollow Road, Malvern, Pennsylvania 19355. 11. Defendant CardioNet, LLC ("CardioNet") is a corporation organized and existing under the laws of the State of Delaware, having its principal place of business at 1000 Cedar Hollow Road, Malvern, Pennsylvania 19355. CardioNet is a provider of ambulatory outpatient management solutions for monitoring clinical information regarding an individual's health. 12. CardioNet is a wholly-owned subsidiary of Defendant BioTelemetry. 13. In a recent Annual Report (10-K), BioTelemetry stated "[w]e market our services throughout the United States and receive reimbursement for the monitoring provided to patients from Medicare and other third-party commercial payors." BioTelemetry further specified that approximately 34% of the company's total revenue from 2017 derives from reimbursement from the Medicare program. No other payor accounted for more than 4% of the company's total revenue. Moreover, for the years ended December 31, 2016 and 2015, revenue from Medicare as a percentage of total revenue was 33% and 34%, respectively. 5 2 14. CardioNet's Mobile Cardiac Outpatient Telemetry™ (MCOT™) device was the first commercialized mobile cardiac telemetry ("MCT") device on the market. 15. CardioNet claims that its MCOT technology includes "beat-to-beat, real-time analysis automatic arrhythmia detection, and wireless ECG [electrocardiographic] transmission." 16. CardioNet received FDA 510(k) marketing approval for its MCOT system in February 2002. 17. CardioNet has been awarded a contract under the federal Supply Schedule program (V797P-4361B), which includes the 65II, A-51 and A-54 (Tele-Home Care, ECG/EKG Apparatus, and Holter Cardiograph Apparatus) schedule for CardioNet's MCOT™. 18. In March 2015, BioTelemetry agreed to pay $6.4 million to resolve allegations made under the FCA that CardioNet overbilled Medicare and other federal healthcare programs for its MCOT services when those services were not reasonable or medically unnecessary. See https://www.justice.gov/opa/pr/cardiac-monitoring-company-pay-64-million-alleged-overbilling- government-health-care-programs 19. The government investigation revealed that CardioNet, which did not provide 24/7 monitoring, was aware that MCT services were not eligible for Medicare reimbursement when provided to patients who had experienced only mild or moderate heart palpitations, since less expensive "Event" or "Holter monitors" could effectively collect data about those patients' conditions. Nonetheless, CardioNet knowingly submitted claims to Medicare for more expensive MCT services by using an inaccurate diagnostic code that ensured that the claims would be reimbursed by Medicare at a higher rate. 20. In its press release, the Department of Justice defined CardioNet's MCOT device as follows: 6 2 An MCOT monitor provides real-time, outpatient cardiac monitoring. MCOT monitors are worn by patients for a period of time during which the device continuously records the activities of the patient's heart, including any irregular rhythms or other cardiac event, and transmits data to CardioNet's diagnostic center using cell phone technology. Traditional, less expensive event monitors only download patient data periodically over a landline. 21. In July 2017, BioTelemetry announced the acquisition of LifeWatch AG, which had its headquarters in Zug, Switzerland. LifeWatch AG is a healthcare technology and solutions company, specializing in advanced digital health systems and wireless remote diagnostic patient monitoring services. LifeWatch AG has operative subsidiaries in the United States, and is the parent company of LifeWatch Services Inc. ("LifeWatch"), a U.S.-based provider of cardiac monitoring services. 22. Like Cardio Net, LifeWatch provided, and continues to provide, services to Government Healthcare Programs. For example, LifeWatch operates as TRICARE in-network provider for telemetry services (Contract Number V797P-4167b). This contract is valid through December 31, 2018, and identifies LifeStar ACT Ambulatory Cardia Telemetry as the service. 23. In March 2012, LifeWatch agreed to pay the United States $18.5 million to resolve allegations that the company submitted false claims to federal healthcare programs relating to its ambulatory cardiac telemetry (ACT) services. 24. In addition to the monetary settlement, LifeWatch entered into a Corporate Integrity Agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services to ensure its continued compliance with federal health care benefit program requirements. 25. At all times relevant to this Complaint, Defendants have manufactured and marketed various cardiac monitoring devices and provided and marketed technical services relat