United States District Court, E.D. Kentucky, Central Division, Lexington
UNITED STATES OF AMERICA, ex rel. JEFFREY RICHARDSON, et al., Plaintiffs,
LEXINGTON FOOT & ANKLE CENTER PSC, et al., Defendants.
MEMORANDUM OPINION AND ORDER
C. Reeves United States District Judge
Jeffrey Richardson and Ramona Brooks filed this qui
tam action under the False Claims Act against Defendants
Michael Allen, DPM, Lexington Foot & Ankle Center, PSC,
and Lexington Diabetic Center, PSC, on March 15, 2017.
[Record No. 1] They allege that Allen and the defendant
organizations took part in fraudulent schemes to gain
reimbursement to which they were not entitled from federal
health care programs. The United States filed a notice of its
election not to intervene on February 9, 2018. [Record No.
13] The Court directed that the Complaint be unsealed and the
relators were permitted to serve the defendants. The
defendants then filed a motion to dismiss on April 23, 2018.
[Record No. 15] Shortly thereafter, on May 8, 2018, the
United States filed a motion to partially intervene. [Record
reasons that follow, the defendants' motion to dismiss
will be granted and the United States' motion to
intervene will be denied, as moot.
Michael Allen is a podiatrist and the president/director of
Defendant Lexington Foot & Ankle Center, PSC, which owns
and operates eight podiatric clinics in various locations
around Kentucky. [Record No. 1, ¶¶ 12, 14] Allen is
also the president and director of Defendant Lexington
Diabetic Center, PSC, which offers diabetic and primary
medical care services in two locations in Kentucky.
Id. at ¶ 13. Relators Richardson and Brooks are
podiatrists who were previously employed by Allen and
Lexington Foot & Ankle Center. Id. at ¶
10-11. Richardson was employed from December 2012 to
September 2016 and Brooks for a substantially shorter period
(July 2016 to September 2016). Id.
relators claim that, during their respective tenures, they
became familiar with the defendants' fraudulent
activities through a variety of avenues. Id. at
¶ 65. They allege that Allen oversaw the defendants'
medical records and billing systems, and controlled and
trained all of the billing and records staff. Id. at
¶ 85. According to the relators, the staff was trained
to ensure that records contained key terms and findings to
obtain payment from federal health care programs.
Id. Allen and his staff instructed podiatrists to
include “key terms” in their patient records and
would even add such terms after-the-fact to justify billing.
Id. at ¶ 87-88. To ensure that key terms and
phrases were incorporated into patient records, Allen and the
defendants utilized templates which included language likely
to cause reimbursement. Id. at ¶ 89.
Podiatrists were admonished when they resisted using the
templates. Id. at ¶ at 90 The relators allege
that Allen trained each of them personally and instructed
them to “upcode” patient encounters. Id.
at ¶ 78. Specifically, Allen instructed them to
“always bill a Level 3, ” or mid-level encounter,
no matter how straightforward the visit may have been.
Id. The relators allege that Allen frequently
“encountered” patients without entering the
examination room. Id. at ¶ 81. They contend
that they “saw” such encounters “falsely
billed to federal health care programs by Dr. Allen and his
staff as Level 3 encounters.” Id. Richardson
claims that approximately 40 patients told him that Allen
diagnosed them from the exam room doorway. Id. at
¶ 83. The relators allege, “[u]pon information and
belief” that these encounters were billed falsely at
Allen's typical Level 3 encounter rate. Id.
relators also contend that Allen trained his staff to upcode
medical procedures. Id. at ¶ 91. For example,
with respect to nail care, Allen instructed them to always
use the billing code for “six or more toes, ”
regardless of the number of toes actually treated.
Id. ¶ 95. They also allege that he instructed
them to always use the more complex of two codes available
for hammertoe surgeries. Id. at ¶¶
relators claim that Allen routinely billed for nail avulsions
(an involved procedure, requiring local anesthesia) when he
actually performed simple “corner clips.”
Id. at ¶¶ 98-100. Richardson contends that
he observed this on 20 to 30 occasions when he saw
Allen's patients for follow-up visits after Allen had
purportedly performed a nail avulsion. Id. at ¶
100. Richardson examined the patients, expecting to find the
“telltale inflammation, missing nail plate, healing
wound in the nail bed . . ., ” but there were “no
physical signs whatsoever” of the nail avulsion
described in Allen's notes. Id. When Richardson
questioned the patients about their encounters with Allen,
they “routinely responded” by telling Richardson
that there was no procedure performed. Id. at ¶
relators provide two particular allegations regarding
upcoding for nail avulsions. They claim that Allen saw
“Patient A” in June 2016, and diagnosed a fungal
infection of the toenail, atherosclerosis, diabetic
neuropathy, and an ingrown nail. Id. at ¶ 102.
Allen's records indicated that he performed a nail
avulsion. Id. Patient A followed up with Allen in
July 2016, but the record for that date does not mention the
nail avulsion or the “characteristic post-procedure
presentation” of the affected toe. Id. at
¶ 103. Richardson followed up with Patient A in late
August 2016 and inquired about the avulsion procedure.
Id. at ¶ 104. Patient A “responded to the
effect of, ‘I don't know what you are talking
about. I just come here to get my nails trimmed.'”
Richardson saw no physical signs that a nail avulsion had
been performed. Id. The relators allege,
“[u]pon information and belief, ” Allen submitted
or caused to be submitted false claims for reimbursement of a
nail avulsion on Patient A that he did not perform.
Id. ¶ 105.
relators contend that Allen also performed a nail avulsion on
“Patient B” in June 2016. Id. at ¶
106. Allen saw Patient B again in mid-July 2016, but his
notes made no mention of the nail avulsion. Id. at
¶ 107. Instead, Allen recorded that he debrided Patient
B's toenails and two calluses. Id. Patient
B's medical record does not contain a medical consent
form, which the relators allege is always completed before an
avulsion. Id. at ¶ 106. As with Patient A, the
relators allege, upon information and belief, that Allen
submitted or caused to be submitted false claims for
reimbursement of a nail avulsion that he did not perform.
Id. at ¶ 108.
relators also claim that Allen performed medically
unnecessary and unreasonable procedures. Id. at
¶ 111. Namely, they assert that Allen almost always
performed a tarsal tunnel release when he performed an
endoscopic plantar fasciotomy. Id. They contend that
he did so without properly diagnosing patients with tarsal
tunnel syndrome and when patients had no symptoms of tarsal
tunnel syndrome. Id. According to the relators,
Allen did it simply so he and Lexington Foot & Ankle
could falsely bill for the procedure. Id.
relators allege that Allen also ordered unnecessary and
unreasonable tests and durable medical equipment
(“DME”) and instructed the relators to do the
same. Id. at ¶ 129. For example, Richardson
contends that Allen ordered a “substantial
combination” of MRI scans, x-rays, Unna boots, Xerosox,
walking boots, surgical shoes, shoe inserts, and night
splints as a first line of treatment for minor tendonitis.
Id. at ¶ 132. Allen instructed and encouraged
staff to order diagnostic tests and encouraged the use of
higher paying CPT codes for x-rays. Id. at
Allen and Lexington Foot & Ankle own and operate an MRI
machine at their Harrodsburg Road clinic in Lexington,
Kentucky. Id. at ¶ 142. The relators allege
that the defendants violated the Stark Law's prohibition
on self-referral, 42 U.S.C. § 1395nn, by ordering MRIs
and scheduling patients for appointments at Lexington Foot
& Ankle Harrodsburg Road clinic. Id. They
further contend that the defendants' staff placed written
confirmation in patient records indicating that third-party
MRI services were offered to patients when no such
alternative services were actually offered. Id. at
relators also claim that Allen and Lexington Foot & Ankle
impermissibly referred patients to Lexington Diabetic Center.
Before Allen or other podiatrists may perform a surgical
procedure, the patient must be medically cleared to undergo
surgery. Id. at ¶ 146. The relators allege that
Allen and Lexington Foot & Ankle self-referred all, or
nearly all, of their surgical candidates to Lexington
Diabetic Center for their pre-operative examinations, in
violation of the Stark Law. ¶ 147. According to the
relators, “patients are just automatically, without
option, scheduled to go to Lexington Diabetic Center, PSC for
pre-operative examination. . . .” ¶ 149. In
addition, Lexington Diabetic Center owns and operates a
device used to administer nerve conduction studies. ¶
151. The relators assert that the defendants impermissibly
self-referred all, or nearly all of their patients who
received nerve conduction studies to Lexington Diabetic
staff of Lexington Foot & Ankle provides podiatric
services to residents of approximately 25 nursing homes in
Central Kentucky. Id. at ¶ 115. However,
routine nail and foot care is not covered by Medicare
ordinarily. 42 C.F.R. § 411.15. But such care may be
reimbursable when systemic conditions cause circulation or
sensation deficits such that routine care may pose a hazard
if performed by a non-professional. The relators assert that the
defendants provided routine nail and foot care to nursing
home patients (and billed federal programs accordingly)
without regard to whether exceptional circumstances were
present. Id. at ¶¶ 115, 123. The relators
further allege that, once a nursing home patient received
foot and nail care, the patient was placed in rotation in
which the patient was seen every 61 days (the maximum
Medicare will allow) indefinitely. Id. at ¶
121. The relators state that the same scheme occurred on an
outpatient basis at Lexington Foot & Ankle Center.
Id. at ¶ 121.
relators claim that the defendants frequently utilized nurse
practitioners to perform routine foot and nail care of
patients in nursing homes. Id. at ¶ 125. They
further allege that the nurse practitioners were always or
almost always sent to perform these procedures alone, which
made all billing for these services fraudulent. Id.
at ¶ 125. The relators also contend that, “upon
information and belief, ” the services provided by