UNITED STATES OF AMERICA EX REL. GERALD POLUKOFF, Plaintiff - Appellant,
ST. MARK'S HOSPITAL; INTERMOUNTAIN HEALTHCARE, INC.; SHERMAN SORENSEN, M.D.; SORENSEN CARDIOVASCULAR GROUP; INTERMOUNTAIN MEDICAL CENTER, Defendants - Appellees, and HCA, INC., a/k/a HCA, Defendant. UNITED STATES OF AMERICA, Amicus Curiae and Intervenor.
from the United States District Court for the District of
Utah (D.C. No. 2:16-CV-00304-JNP-EJF)
Tejinder Singh, Goldstein & Russell, P.C., Bethesda,
Maryland (Thomas C. Goldstein, Goldstein & Russell, P.C.,
Bethesda, Maryland; Rand P. Nolen, George M. Fleming, Sylvia
Davidow, Gregory D. Brown, David Hobbs, and Jessica A.
Kasischke, Fleming, Nolen & Jez, LLP, Houston, Texas,
with him on the briefs), appearing for Appellant.
Scott Ballenger, Latham & Watkins LLP, Washington DC
(Alexandra P. Shechtel, Latham & Watkins LLP, Washington
DC; Katherine A. Lauer, Latham & Watkins LLP, San Diego,
California; Andrew A. Warth, W. David Bridgers, and Wells
Trompeter, Waller Lansden Dortch & Davis LLP, Nashville,
Tennessee, with him on the brief), appearing for Appellee St.
Matthew L. Knowles, McDermott Will & Emery LLP, Boston,
Massachusetts (M. Miller Baker, McDermott Will & Emery
LLP, Washington, DC; Shamis Beckley and Alexander J.
Kritikos, McDermott Will & Emery LLP, Boston,
Massachusetts; Alan C. Bradshaw, Sammi V. Anderson, and
Christopher M. Glauser, Manning Curtis Bradshaw & Bednar,
PLLC, Salt Lake City, Utah; Daniel S. Reinberg and Asher D.
Funk, Polsinelli PC, Chicago, Illinois, with him on the
brief), appearing for Appellee Intermountain Healthcare, Inc.
and Intermountain Medical Center.
J. Benard, Holland & Hart LLP, Salt Lake City, Utah, and
Gregory Goldberg, Holland & Hart LLP, Denver, Colorado,
on the brief for Appellees Sherman Sorensen M.D., and
Sorensen Cardiology Group.
Carroll, Attorney, Appellate Staff, Civil Division, United
States Department of Justice, Washington, DC (Chad A.
Readler, Acting Assistant Attorney General, United States
Department of Justice, Washington, DC; John W. Huber, United
States Attorney for the District of Utah, Salt Lake City,
Utah; Douglas N. Letter and Michael S. Raab, Attorneys,
Appellate Staff, Civil Division, United States Department of
Justice, Washington, DC), appearing for Intervenor and Amicus
Curiae United States of America.
TYMKOVICH, Chief Judge, BRISCOE and HARTZ, Circuit Judges.
BRISCOE, CIRCUIT JUDGE.
a qui tam action alleging violations of the False
Claims Act ("FCA"), 31 U.S.C. §§ 3729-33,
involving fraudulent reimbursements under the Medicare Act,
42 U.S.C. §§ 1395-1395ccc. Plaintiff Gerald
Polukoff, M.D., is a doctor who worked with Defendant Sherman
Sorensen, M.D. After observing some of Dr. Sorensen's
medical practices, Dr. Polukoff brought this FCA action, on
behalf of the United States, against Dr. Sorensen and the two
hospitals where Dr. Sorensen worked (collectively,
"Defendants"). Dr. Polukoff alleges Dr. Sorensen
performed thousands of unnecessary heart surgeries and
received reimbursement through the Medicare Act by
fraudulently certifying that the surgeries were medically
necessary. Dr. Polukoff further alleges the hospitals where
Dr. Sorensen worked were complicit in and profited from Dr.
Sorensen's fraud. The district court granted
Defendants' motions to dismiss, reasoning that a medical
judgment cannot be false under the FCA. Exercising
jurisdiction pursuant to 28 U.S.C. § 1291, we REVERSE
and REMAND for further proceedings.
FCA 'covers all fraudulent attempts to cause the
government to pay out sums of money.'" United
States ex rel. Conner v. Salina Regional Health Ctr.,
Inc., 543 F.3d 1211, 1217 (10th Cir. 2008) (quoting
United States ex rel. Boothe v. Sun Healthcare Grp.,
Inc., 496 F.3d 1169, 1172 (10th Cir. 2007)).
Specifically, any person who:
(A) knowingly presents, or causes to be presented, a false or
fraudulent claim for payment or approval;
(B) knowingly makes, uses, or causes to be made or used, a
false record or statement material to a false or fraudulent
(C) conspires to commit a violation of subparagraph (A), (B),
(D), (E), (F), or (G); [or]
(G) knowingly makes, uses, or causes to be made or used, a
false record or statement material to an obligation to pay or
transmit money or property to the Government, or knowingly
conceals or knowingly and improperly avoids or decreases an
obligation to pay or transmit money or property to the
Government, is liable to the United States Government for a
civil penalty [and treble damages].
31 U.S.C. § 3729(a)(1). The FCA defines the
"knowingly" scienter requirement as follows:
(A) mean[s] that a person, with respect to information-
(i) has actual knowledge of the information;
(ii) acts in deliberate ignorance of the truth or falsity of
the information; or
(iii) acts in reckless disregard of the truth or falsity of
the information; and (B) require[s] no proof of specific
intent to defraud . . . .
Id. § 3729(b)(1).
are two options to remedy a violation of the FCA.
"First, the Government itself may bring a civil action
against the alleged false claimant." Vt. Agency of
Nat. Res. v. United States ex rel. Stevens, 529 U.S.
765, 769 (2000). "Second, as is relevant here, a private
person (the relator) may bring a qui tam civil
action 'for the person and for the United States
Government' against the alleged false claimant, 'in
the name of the Government.'" Id. (quoting
31 U.S.C. § 3730(b)(1)). If a relator files a qui
tam civil action, the government may intervene and take
over the case. 31 U.S.C. § 3730(b)(2). "If the
government elects not to proceed with the action," the
relator "shall have the right to conduct the
action." Id. § 3730(c)(3). Depending on
the specific circumstances of the qui tam suit, the
government and the relator divide any proceeds derived from
the suit. Id. § 3730(d).
is applicable to many statutes that provide for federal
reimbursement of expenses. One such statute is the Medicare
Act,  which imposes requirements for
reimbursement of medical expenses. As relevant here, the
Medicare Act states that "no payment may be made . . .
for any expenses incurred for items or services" that
"are not reasonable and necessary for the
diagnosis or treatment of illness or injury or to improve the
functioning of a malformed body member." 42 U.S.C.
§ 1395y(a)(1)(A) (emphasis added). Physicians and
medical providers who seek reimbursement under the Medicare
Act must "certify the necessity of the services
and, in some instances, recertify the continued need for
those services." 42 C.F.R. 424.10(a) (Oct. 1, 2013)
(emphasis added); see also 42 U.S.C. §§
1395f(a), 1395n(a) (listing the various certifications).
Secretary of Health and Human Services decides "whether
a particular medical service is 'reasonable and
necessary' . . . by promulgating a generally applicable
rule or by allowing individual adjudication."
Heckler v. Ringer, 466 U.S. 602, 617 (1984)
(emphasis added). The former course involves a
"national coverage determination" that announces
"whether or not a particular item or service is covered
nationally." 42 U.S.C. § 1395ff(f)(1)(B). In the
absence of a national coverage determination, local Medicare
contractors may issue a "local coverage
determination" that announces "whether or not a
particular item or service is covered" by that
contractor. Id. § 1395ff(f)(2)(B).
latter course allows "contractors [to] make
individual claim determinations, even in the absence of [a
national or local coverage determination], . . . based on the
individual's particular factual situation." 68 Fed.
Reg. 63, 692, 63, 693 (Nov. 7, 2003). In making an individual
claim determination about whether to reimburse a medical
provider, "[c]ontractors shall consider a service to be
reasonable and necessary if the contractor determines that
the service is: [(1)] Safe and effective; [(2)] Not
experimental or investigational . . .; and [(3)]
Appropriate." Centers for Medicare & Medicaid
Services ("CMS"),  Medicare Program Integrity
Manual § 13.5.1 (2015) (describing local coverage
determinations); see also id. § 13.3
(incorporating § 13.5.1's standards for individual
claim determinations). One factor that contractors consider
when deciding whether a service is "appropriate" is
whether it is "[f]urnished in accordance with accepted
standards of medical practice for the diagnosis or treatment
of the patient's condition or to improve the function of
a malformed body member." Id. § 13.5.1.
the motion-to-dismiss stage, we must accept all the
well-pleaded allegations of the complaint as true and must
construe them in the light most favorable to the
plaintiff." Albers v. Bd. of Cty. Comm'rs of
Jefferson Cty., 771 F.3d 697, 700 (10th Cir. 2014)
(quotation omitted). As a result, we rely on Dr.
Polukoff's amended complaint.
The PFO closure procedure
case involves two very similar cardiac conditions: patent
foramen ovale ("PFO") and atrial septal defect
("ASD"). Both PFOs and ASDs involve a hole between
the upper two chambers of the heart, but they have different
causes. Most people are born with a PFO, as it helps blood
circulate throughout the heart while in the womb, but for 75%
of the population, the hole closes soon after birth. ASDs, on
the other hand, are an abnormality. Regardless, both PFOs and
ASDs allow blood to flow in the wrong direction within the
upper chambers of the heart. In rare cases, they can lead to
a variety of dangerous complications, including stroke.
Physicians can "close" ASDs and PFOs through ASD
and PFO closures (collectively, "PFO closures"), a
percutaneous surgical procedure involving cardiac
catheterization. In layman's terms, physicians insert a
thin tube into a blood vessel to access the heart, rather
than performing open heart surgery.
amended complaint makes specific reference to industry
guidelines published by the American Heart Association and
American Stroke Association (the "AHA/ASA
Guidelines") in 2006 and 2011, related to PFO
closures. The 2006 AHA/ASA Guidelines observed that
"[s]tudies have found an association between PFO and
cryptogenic stroke." App'x at 2077. They noted
"conflicting reports concerning the safety and efficacy
of surgical PFO closure" to treat cryptogenic stroke,
but after reviewing several studies, also noted that each
reported "no major complications." Id. The
2006 AHA/ASA Guidelines concluded: "Insufficient data
exist to make a recommendation about PFO closures in patients
with a first stroke and a PFO. PFO closure may be considered
for patients with recurrent cryptogenic stroke despite
optimal medical therapy . . . ." Id. at 2079.
In other words, the 2006 AHA/ASA Guidelines advised that (1)
for patients with two or more cryptogenic strokes, PFO
closures may be considered; (2) for patients ...