The U.S. Court of Appeals for the Sixth Circuit has handed the False Claims Act (FCA) bar another lesson in humility – and perhaps prompted a quiet sigh of relief for healthcare providers – by reaffirming that not every regulatory misstep or billing nuance amounts to fraud. In United States ex rel. O’Laughlin v. Radiation Therapy Services, P.S.C., the Court rejected a relator’s ambitious attempt to stretch the FCA into a catch-all compliance statute.
At issue was the Medicare “incident-to” billing rule, a bureaucratic phrase with deceptively large implications. Under this rule, services performed by non-physician practitioners (NPPs) can be billed under a supervising physician’s number if certain conditions are met –chief among them that the physician provides direct supervision.
“Direct,” however, is a term only a regulator could love: it means the physician must be immediately available, though not necessarily in the same room. The relator, a former employee of a radiation therapy center, claimed the company violated the FCA by billing incident-to services when the supervising physician wasn’t physically present.
In her view, that made every claim a false one. The Sixth Circuit disagreed, refusing to convert a regulatory dispute into a federal fraud case.
The Court recognized that Medicare rules are confusing even for the most seasoned compliance teams. The company had relied on a reasonable, if not perfect, interpretation of “direct supervision.” More importantly, the...
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