by Ben Vernia | September 6th, 2011
On August 23, the Sixth Circuit Court of Appeals, in U.S. ex rel. Chesbrough v. VPA, Inc., affirmed a Michigan district court’s dismissal of a qui tam suit brought by a radiologist and his wife against the radiology service that contracted with them to read x-rays. The relators alleged that a high percentage of the radiology studies provided to them for their review either failed to meet standards of care, or were diagnostically worthless, that the company violated Michigan law because it was not owned by a physician, and that it violated HIPAA regulations government patient privacy.
Reviewing the district court’s decision, the Sixth Circuit first examined the quality-of-care allegations. It concluded that the relators had failed to allege any specific standard of care requirement and, for the substandard x-rays, it held that Medicare’s medical necessity rule did not impose such a standard. The court held that the nondiagnostic – i.e., worthless – radiology films could serve as the basis for a false claim allegation, but it concluded that the relators had failed to allege that any of this subset of studies had been billed to Medicare or Medicaid. The court wrote: “Assuming that the five tests alleged by the Chesbroughs to be nondiagnostic constituted ‘worthless services,’ it is not necessarily true that VPA billed the government for these tests.”
The court likewise rejected the relators’ claimed violations of HIPAA and the Michigan corporations law, finding that they lacked adequate support in the federal healthcare programs’ regulations.
Although the relators claimed that knowledge of which claims were submitted to the government lay solely with the defendant, the court refused to relax the particularity requirement of Rule 9(b), because there was nothing (such as the relators’ personal knowledge) that would “strongly” support inferring the submission of false claims.
