Proving Fraud by A Predetermined Treatment Protocol

RICO Action Against Medical Providers Raises Discovery Difficulties

Insurance companies who claim to be the victims of health care providers operating in a no fault auto insurance state like Florida. In Government Employees Insurance Co., et al. v. Mark A. Cereceda, et al., CASE NO. 19-22206-CIV-ALTONAGA/GOODMAN, United States District Court Southern District of Florida Miami Division (January 15, 2021) where Plaintiffs filed a 406-page Complaint asserting 43 counts and attaching more than 8,500 pages of spreadsheets as exhibits. Specifically, Government Employees Insurance Co. (“Geico”) and related Geico entities (“Geico,” collectively) sued chiropractor (Mark A. Cereceda), other healthcare providers, and myriad LLCs which purportedly provided fraudulent healthcare services. Geico alleges that Cereceda is the managing member and owner of the LLCs.

When an insurer sues a health care provider for fraud based on the provider’s submission of bills for services rendered pursuant to a predetermined protocol, the insurer is alleging that the provider purported to treat an entire patient population in a cookie-cutter manner which, in fact, makes no medical sense, in order to financially enrich the provider by maximizing collection of the patients insurance benefits. Indeed, in predetermined-protocol cases, insurers often explain that the fraudulent nature of each bill or claim is not apparent when reviewed in isolation. Proving each of thousands of false bills would be difficult and not cost effective. That is why courts allow proof by proving predetermined Treatment Protocols where everyone receives the same treatment. The Defendants’ demands for discovery chill the opportunity to prove the claimed fraud.

FACTS

Geico alleges that Defendants billed it for fraudulent healthcare services as the assignees of the Geico insureds’ no-fault (personal injury protection, or “PIP”) insurance benefits. Geico’s lawsuit is based on 456,612 invoices, reflecting purported healthcare services provided to approximately 8,000 patients.

During discovery, Defendants propounded interrogatories designed to obtain the specifics of Geico’s allegations. Geico’s response was that everything was improper. Specifically, Geico (which is seeking to recover $20 million) provided supplemental interrogatory answers declaring that all charges were fraudulent.

Geico contends that it need not provide any further detail because courts have permitted insurance carriers to bring these types of lawsuits by alleging an overall scheme to use pre-determined protocols for patients, without regard for the individual circumstances of each patient.

Defendant’s Discovery Motion

Defendants filed a motion to dismiss the lawsuit arguing that the Court “should be skeptical that Geico’s shotgun approach of listing every invoice for every patient without delineating which services it is not contesting as legitimately medically rendered can pass muster under Federal Rule 11.” (emphasis in original)]. United States District Judge Cecilia M. Altonaga denied the dismissal motion. At the hearing on Defendants’ motion to dismiss, Judge Altonaga ruled that the complaint “more than satisfies Rule 12(b)(6) and the pleading standards for the fraud-based claims that are alleged in it.”

Plaintiffs further amended some of their responses with 10 illustrations involving 32 massage treatments, a manual therapy treatment, five hot/cold treatments, five ultrasound treatments, four additional massage treatments, 28 ultrasound treatments, six group therapeutic procedure treatments, five additional ultrasound treatments, four chiropractic manipulation treatments, eight group therapeutic procedure treatments, eight additional chiropractic manipulation treatments, 11 more ultrasound treatments, 17 more ultrasound treatments, 17 more chiropractic manipulation treatments, 12 additional ultrasound treatments, and 12 additional massage treatments.

Geico’s counsel explained to Judge Goodman that its expert report did not discuss specific patient files or give conclusions on a patient-by-patient basis – but that the expert might, at trial, discuss certain specific patient files in order to explain his conclusions and provide concrete, in-context illustrations of his views.

Geico’s expert, Dr. James Dillard, whose report represents that he reviewed more than 450,000 invoices concerning approximately 8,000 patients. But none of his opinions or conclusions mention any specific patient, file, or service.

Dr. Dillard’s report opined that Defendants’ practices used pre-determined treatment protocols for “the substantial majority” of their patients, which “primarily” consisted of medically unnecessary purported services without regard for the individual circumstances of the patients subject to these services. He also concluded that in a “significant” number of cases the purported therapy services “evidently” were performed by unsupervised individuals who lacked credentials to perform the services without direct supervision.

Jean Acevedo, one of Defendants’ experts, opined that there is no evidence to suggest any pattern of fraudulent claims.

Federal courts presiding over no-fault insurance (PIP) fraud cases like this one have held that a plaintiff insurer can establish the absence of medical necessity by demonstrating that a defendant healthcare provider used “a pre-determined treatment protocol that resulted in a large cohort of patients receiving substantially similar treatment regardless of their individualized circumstances.” Moreover, courts have rejected the argument that a determination of liability requires a plaintiff-insurer to produce some additional, individualized proof to demonstrate that each of the healthcare services at issue was medically unnecessary.

Judge Goodman stated that he was comfortable with the notion that a carrier may, if it wishes, draft a complaint using the protocol theory and then use that approach again at trial. Geico has already survived a motion to dismiss and it will presumably be able to get to trial on the same theory of a broad-based fraud based on pre-determined medical protocols.

Geico and its experts have not analyzed the case on a patient-by-patient, claim-by-claim, service-by-service basis. It would require a massive effort for Geico to do that now. Moreover, because Geico may be able to prevail at trial on this theory, it has no need of its own to generate a comprehensive claim-by-claim analysis.

If Geico were to proceed at trial with only evidence of Defendants’ overall business model, then the failure to provide specific discovery responses would be understandable.

The Court has the power to prevent an unfair result by giving Geico a choice on how to proceed and by limiting trial evidence if necessary, depending on which alternative Geico selects. A court may limit the scope of evidence or theories of liability a party may offer in support of its case based on its discovery responses or expert reports.

Adopting that common sense approach, the Court’s solution was to give Geico a choice:

•if it sticks with its chosen strategy of using a non-specific protocol approach, then its experts will not be able to testify about any specific patient, claim or service — even if it is for “illustration” purposes.

• if Geico wants to preserve its ability to have an expert give trial testimony which mentions in any way any specific claim, patient, or service, then it will need to fully and specifically answer the interrogatories at issue.

Given Dr. Dillard’s conclusions that are phrased with terminology which seem to reflect a less-than-all assessment of claims as being fraudulent (i.e., “substantial majority,” “primarily,” “significant number,” “large number,” “and “very small percentage”). On the other hand, if Geico does not change its approach but Defendants question Geico’s experts about specific patients, files, and services at either a deposition or at trial, then Defendants will have “opened the door” and given Geico the opportunity to have its experts discuss specifics, whether for illustrative purposes or otherwise. But asking a general question about what the expert did or did not do will not cause the door to be opened.

If Geico decides to preserve its ability to introduce specific evidence about particular claims or patients or services, then it must provide the comprehensive interrogatory answers within 30 days of giving notice of its strategic solution.

ZIFL OPINION

An insurer alleging fraud based on a predetermined treatment protocol should not have to prove that each claim, in a vacuum, is fraudulent. A middle-ground accepted by courts allows insurers to rely on non-credible patterns in providers’ bills and documentation to explain globally why groups of claims are fraudulent, provided the insurer sufficiently identifies the claims at issue. It can also use specific cases to prove the pattern or fraud but then it must respond in detail to discovery requests. In that regard I have seen in my practice medical billing and reporting that was identical to multiple patients except for the name of the patient. If Geico can show that type of fraud it will have no problem with the RICO action proof and will not need to answer interrogatories about the thousands of fraudulent claims.