Wollman v. Massachusetts General Hospital Inc.

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

UNITED STATES OF AMERICA and

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COMMONWEALTH OF

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MASSACHUSETTS,

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Plaintiffs, ex rel.

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LISA WOLLMAN, M.D.,

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* Civil Action No. 1:15-cv-11890-ADB

Relator,

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v.

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THE GENERAL HOSPITAL

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CORPORATION, et al.,

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Defendants.

MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION TO DISMISS

BURROUGHS, D.J.

Relator Lisa Wollman, M.D. (“Wollman”), a former anesthesiologist at Defendant

Massachusetts General Hospital (“MGH”), brings this qui tam action1 under the False Claims

Act (“FCA”), 31 U.S.C. §§ 3729 et seq., and the Massachusetts False Claims Act (“MFCA”),

Mass. Gen. Laws ch. 12, § 5B, against MGH, Massachusetts General Physicians Organization

(“MGPO”), and Partners Healthcare System (“Partners”) (collectively “Defendants”).2

1 “‘Qui tam’ is an abbreviation for ‘qui tam pro domino rege quam pro seipso,’ which literally

means “he who as much for the king as for himself. Qui tam provisions, which historically have

allowed parties to initiate suit on the government’s behalf and to share in the recovery as bounty,

first gained popularity in thirteenth-century England as a supplement to ineffective law

enforcement.” United States ex rel. S. Prawer & Co. v. Fleet Bank of Me., 24 F.3d 320, 324 n.7

(1st Cir. 1994) (citations omitted).

2 MGPO is a private corporation that was involved in billing for medical services and paying

staff members at MGH, and Partners is a nonprofit corporation that oversaw the medical

Now pending before the Court is Defendants’ motion to dismiss the Second Amended

Complaint for failure to state a claim. [ECF No. 91]. For the reasons set forth below, the motion

to dismiss [ECF No. 91] is DENIED.

I. BACKGROUND

The following facts are taken from the Second Amended Complaint. [ECF No. 89

(“SAC”)]. The Court, as it must, accepts the well-pleaded allegations as true and draws all

reasonable inferences in favor of Wollman. See Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993)

(citing Monahan v. Dorchester Counseling Ctr., Inc., 961 F.2d 987, 988 (1st Cir. 1992)). This

procedural and factual summary largely restates the summary provided in the Court’s

memorandum and order on Defendants prior motion to dismiss. See generally United States ex

rel. Wollman v. Gen. Hosp. Corp., No. 15-CV-11890-ADB, 2018 WL 1586027 (D. Mass. Mar.

30, 2018).

Between 2010 and 2015, Wollman was a treating anesthesiologist at MGH, a teaching

hospital that provides medical services to, among others, Medicare and Medicaid beneficiaries.

SAC ¶¶ 3, 10, 15, 30. MGH receives funds under Medicare Part A and other federal and state

government programs to train residents (medical school graduates who are training in a medical

specialty) and fellows (who have completed a residency program). Id. ¶¶ 25–28. Teaching

hospitals like MGH are therefore not typically reimbursed under Medicare Part B for services

that residents and fellows provide. Id. ¶¶ 31, 34. They may, however, seek payment under

Medicare Part B and Medicaid for services provided by the teaching physicians charged with

residency programs at MGH. [ECF No. 89 (“Second Amended Complaint” or “SAC”)

¶¶ 16−17].

training the residents and fellows and who supervise services that residents and fellows provide.

Id. ¶¶ 29, 35–36.

Wollman alleges that Defendants fraudulently billed Medicare and Medicaid for

overlapping and concurrent surgeries in which a teaching physician performed two or three

surgical procedures that required patients to be under anesthesia at the same time. Specifically,

Wollman asserts that, in violation of applicable regulations promulgated by the Centers for

Medicare and Medicaid Services (“CMS”), teaching surgeons in MGH’s Orthopaedic Surgery

Department routinely left patients who were undergoing surgery alone with residents and fellows

in order to conduct concurrently scheduled surgeries, and that they did so without identifying

another qualified teaching physician who would be immediately available in the event of an

emergency and without keeping proper records. Id. ¶ 1. Wollman also asserts that this practice

resulted in patients being under anesthesia for extended, medically unnecessary periods. Id.

Additionally, Wollman claims that Defendants concealed the fact of concurrently scheduled

surgeries from patients and failed to obtain patients’ “informed consent” for the inadequately

supervised role that residents and fellows played. Id.

A. Procedural History

Under the FCA and the MFCA, the Attorney General or a private party may initiate a

lawsuit alleging fraud on the government. 31 U.S.C. § 3730(a)–(b); Mass. Gen. Laws ch. 12,

§ 5C(1)–(4). “A private enforcement action under the FCA is called a qui tam action, with the

private party referred to as the ‘relator.’” United States ex rel. Eisenstein v. City of New York,

556 U.S. 928, 932 (2009) (quoting Vt. Agency of Nat. Res. v. United States ex rel. Stevens, 529

U.S. 765, 769 (2000)). “Qui tam complaints are initially filed under seal, and relators must allow

the government sixty days to intervene and assume primary responsibility for prosecuting the

action.” United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 719 F.3d 31, 33 (1st Cir.

2013) (citing 31 U.S.C. § 3730(b)(2)−(3), (c)). If the government declines to intervene, the

relator “may pursue the action on its behalf.” United States ex rel. Ondis v. City of Woonsocket,

587 F.3d 49, 53 (1st Cir. 2009) (citing 31 U.S.C. § 3730(b)(4)). Regardless of the government’s

intervention, “[a] private relator is entitled to a portion of any proceeds from the suit.” United

States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 16 (1st Cir. 2009) (quoting

United States ex rel. Rost v. Pfizer, Inc., 507 F.3d 720, 727 (1st Cir. 2007), overruled in part as

recognized by United States ex rel. Wilson v. Bristol-Myers Squibb, Inc., 750 F.3d 111, 11314

(1st Cir. 2014)).

On May 19, 2015, Wollman filed the initial complaint in this action under seal. [ECF

No. 1]. After several requests from the government for extensions of time to continue its

investigation, on February 17, 2017, both the United States and the Commonwealth of

Massachusetts declined to intervene in this matter. [ECF Nos. 19, 20]. The initial complaint was

ordered unsealed on April 12, 2017. [ECF Nos. 21, 23].

On June 7, 2017, Wollman filed her First Amended Complaint. [ECF No. 31].

Wollman’s First Amended Complaint provided the surgery type, start time, and surgery duration

for forty-six surgeries that occurred on sixteen different dates between July 2011 and March

2013. [ECF No. 31 ¶ 74]. Nearly all of the forty-six surgeries started at nearly the same time or

substantially overlapped with one or two of the other listed surgeries. See id. Wollman also

alleged that at least one of the patients who underwent each pair or trio of the concurrent or

overlapping surgeries was eligible for Medicare. See id. ¶ 75. Although it asserted that claims

for eligible patients had been submitted to Medicare and/or Medicaid, the First Amended

Complaint lacked details establishing that the asserted claims had actually been submitted and

paid. On March 30, 2018, following consideration of Defendants’ motion to dismiss and

Wollman’s opposition, the Court dismissed the First Amended Complaint because although it

“describe[d] an allegedly illegal ‘scheme,’ [it] only refer[ed] to specific false claims in the most

conclusory terms.” United States ex rel. Wollman, 2018 WL 1586027, at *6. In essence,

Wollman’s allegations had not identified the false claims for payment that had been submitted to

the government, including the “who, what, when, where, and how” required by Federal Rule of

Civil Procedure 9(b). [ECF No. 65 at 13–16, 20–21]; see also United States ex rel. Karvelas v.

Melrose-Wakefield Hosp., 360 F.3d 220, 232 (1st Cir. 2004) (“pleadings invariably are

inadequate unless they are linked to allegations, stated with particularity, of the actual false

claims submitted to the government that constitute the essential element of an FCA qui tam

action”), abrogated on other grounds by Allison Engine Co., Inc. v. United States ex rel. Sanders,

553 U.S. 662 (2008).

On August 13, 2018, Wollman filed her Second Amended Complaint. [ECF No. 89].

The Second Amended Complaint is largely the same as the First Amended Complaint, except

that Wollman has added specifics about several of the allegedly fraudulent claims that were

submitted to the government for payment. See SAC ¶¶ 71, 73–78, 83. For eleven of the forty-

six patients whose overlapping or concurrent surgeries are listed as examples to show that

applicable regulations and rules were violated, Wollman now provides specifics for the claims

that were submitted to Medicare or Medicaid, including services billed for, physician name, the

billing provider, the amount billed, and the amount paid by the patient and government payor.

Id. ¶ 83 nn.36–46, Exs. A, B. The specifics of these claims have been redacted and/or filed

under seal to protect patient and provider privacy. Id.

Counts I and V allege violations of the FCA and MFCA, 31 U.S.C. § 3729(a)(1); Mass.

Gen. Laws ch. 12, § 5B(a)(1), for knowingly causing false claims to be submitted to the

government in violation of Medicare and Medicaid rules regarding overlapping surgeries, record-

keeping, informed consent, and unreasonable and unnecessary anesthesia. SAC ¶¶ 15058,

16871. Counts II and VI allege violations of the FCA and MFCA, 31 U.S.C. § 3729(a)(1)(B);

Mass. Gen. Laws ch. 12, § 5B(a)(2), for knowing use of false records or statements that caused

false claims to be paid by the government. SAC ¶¶ 15558, 17377. Counts III and VII allege

violations of the FCA and MFCA, 31 U.S.C. § 3729(a)(1)(C); Mass. Gen. Laws ch. 12,

§ 5B(a)(3), for conspiracy to defraud the government. SAC ¶¶ 15963, 17882. Lastly, Counts

IV and VIII allege violations of the FCA and MFCA, 31 U.S.C. § 3729(a)(1)(G); Mass. Gen.

Laws ch. 12, § 5B(a)(9), for knowingly making false statements that were material to an

obligation to pay money to the government. SAC ¶¶ 164–67, 18386. Defendants move to

dismiss all counts for failure to meet the heightened pleading standard required by Federal Rule

of Civil Procedure 9(b) and for failure to state a claim pursuant to Federal Rule of Civil

Procedure 12(b)(6). [ECF No. 91].

B. Medicare and Medicaid Rules and Regulations

Wollman alleges violations of rules and regulations for Medicare and Medicaid

reimbursement covering: (1) billing and record-keeping for overlapping and concurrent

surgeries; (2) billing for the administration of anesthesia; and (3) informed consent.

1. Billing and Record-Keeping for Overlapping and Concurrent Surgeries

To receive Medicare payments for services performed by a teaching physician, the

services must either be either (1) “personally furnished by a physician who is not a resident,” or

(2) “furnished by a resident in the presence of a teaching physician,” except in certain specified

situations. See 42 C.F.R. §§ 415.170, 415.172; SAC ¶ 42. Under Section 415.172, if a resident

participates in providing a service, MGH may be reimbursed “only if a teaching physician is

present during the key portion of any service or procedure for which payment is sought.” 42

C.F.R. § 415.172(a); SAC ¶ 43. “In the case of surgical, high-risk, or other complex

procedures,” the teaching physician must be present during “all critical portions” of the

procedure and “immediately available to furnish services during the entire service or procedure.”

42 C.F.R. § 415.172(a)(1); SAC ¶ 44. When conducting overlapping surgeries, only once “all of

the key portions of the initial procedure have been completed” may the teaching physician

“begin to become involved in a second procedure.” CMS, Medicare Claims Processing Manual:

Chapter 12 – Phyisicans/Nonphyiscian Practitioners, 158–59 (2017) (“CMS Manual”) (“[T]he

critical or key portions [of overlapping surgeries] may not take place at the same time.”),

https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c12.pdf

(“CMS Manual”); see id. (“[T]he critical or key portions [of both procedures] may not take place

at the same time.”).

“When a teaching physician is not present during non-critical or non-key portions of the

procedure and is participating in another surgical procedure, [he or she] must arrange for another

qualified surgeon to immediately assist the resident . . . should the need arise.” CMS Manual at

159; see SAC ¶ 44. The teaching physician must also “personally document in the medical

record that [he or she] was physically present during the critical or key portion(s) of both

procedures.” CMS Manual at 159; SAC ¶ 52. No reimbursement is available for triple-booked

surgeries. CMS Manual at 159 (“In the case of three concurrent surgical procedures, the role of

the teaching surgeon . . . in each of the cases is classified as a supervisory service to the hospital

rather than a physician service to an individual patient and is not payable under the physician fee

schedule.”); SAC ¶ 49.3

When submitting a claim for reimbursement, a teaching physician must state whether a

resident participated in the service provided and must fully comply with the CMS Manual. CMS

Manual at 165. MGH submits claims to Medicare using Form 1500 provided by the CMS,

which administers Medicare. See SAC ¶¶ 30–33, 41. By completing a Form 1500, MGH

certifies that the information on the form is true, accurate and complete, that the claim complies

with all applicable Medicare rules and regulations for payment, and that the services provided

were medically necessary. Id. ¶ 41.4

2. Anesthesia

Medicare reimburses anesthesia practitioners for “anesthesia time,” which is defined as

“the period during which an anesthesia practitioner is present with the patient.” CMS Manual at

120; SAC ¶ 60. Anesthesia time “starts when the anesthesia practitioner begins to prepare the

3 The standard for seeking reimbursement for overlapping surgeries is substantially the same

under the Massachusetts Medicaid program. SAC ¶¶ 55–59. The teaching physician “must be

scrubbed and physically present during the key portion of the surgical procedure,” and while the

teaching physician is not physically present, “he or she must remain immediately available to

return to the procedure, if necessary.” 130 Mass. Code Regs. 450.275(D)(4); SAC ¶ 56. With

respect to overlapping surgeries, the teaching physician may become involved in a second

procedure “[w]hen all of the key portions of the first procedure have been completed.” 130

Mass. Code Regs. 450.275(D)(4)(a); SAC ¶ 58. Because the teaching physician must be present

during the key portions of both operations, the “key portions must not occur simultaneously.”

130 Mass. Code Regs. 450.275(D)(4)(a). When the teaching physician becomes involved in a

second procedure, “he or she must arrange for another teaching physician to be immediately

available to intervene as needed.” Id. at 450.275(D)(4). The teaching physician’s treatment

notes must reflect “the key portions of both procedures . . . to demonstrate that he or she was

immediately available to return to either procedure as needed.” Id. at 450.275(D)(4)(a).

4 See CMS Form 1500 at 2, https://www.cms.gov/Medicare/CMS-Forms/CMS-

Forms/Downloads/CMS1500.pdf (“I certify that . . . this claim, whether submitted by me or on

my behalf by my designated billing company, complies with all applicable Medicare and/or

Medicaid laws, regulations, and program instructions for payment . . . .”).

patient for anesthesia services in the operating room or an equivalent area and ends when the

anesthesia practitioner is no longer furnishing anesthesia services to the patient, that is, when the

patient may be placed safely under postoperative care.” CMS Manual at 120; SAC ¶ 60. As

Medicare generally excludes from coverage any claims for procedures that “are not reasonable

and necessary for the diagnosis or treatment of illness or injury,” 42 U.S.C. § 1395y(a)(1)(A),

unnecessarily prolonged administrations of anesthesia are not reimbursable.

3. Informed Consent

Hospitals are required to obtain Medicare and Medicaid beneficiaries’ informed consent

for the services provided to them in order to be reimbursed. SAC ¶¶ 63–65; see 42 C.F.R.

§ 482.13(b)(1)–(2) (stating that condition of participation includes patient’s right “to participate

in the development and implementation of his or her plan of care” and “right to make informed

decisions regarding his or her care”); 42 C.F.R. § 482.51(b)(2) (stating that condition of

participation includes “a properly executed informed consent form for the operation” being

completed before surgery.); CMS, State Operations Manual: Appendix A – Survey Protocol,

Regulations and Interpretive Guidelines for Hospitals, 3 (2017),

https://www.cms.gov/Regulations-and-

Guidance/Guidance/Manuals/downloads/som107ap_a_hospitals.pdf (requiring hospitals to be “in

compliance with the Federal requirements set forth in the Medicare Conditions of Participation []

in order to receive Medicare/Medicaid payment.”). CMS’s guidelines further provide that a

“well-designed informed consent process” might include a discussion of whether, besides the

lead surgeon, other physicians (including residents or fellows) will perform important tasks

related to the surgery. CMS, Revisions to the Hospital Interpretive Guidelines for Informed

Consent, 6 (Apr. 13, 2007), https://www.cms.gov/medicare/provider-enrollment-and-

certification/surveycertificationgeninfo/downloads/scletter07-17.pdf.

C. Relator’s Allegations

Wollman contends that Defendants violated the Medicare and Medicaid billing standards

for overlapping and concurrent surgeries, reasonable and necessary administration of anesthesia,

and adequate informed consent. She alleges that beginning in or around 2010, she was assigned

to provide in-patient anesthesia services to surgical patients in MGH’s Department of

Orthopaedic Surgery. SAC ¶ 68. She witnessed the department’s practice of scheduling

overlapping and concurrent surgeries that required residents and fellows to conduct some or all

of the surgery outside the presence of a teaching physician, but she never saw a double-booked

surgeon designate another teaching physician to be immediately available while he or she was

involved in another ongoing procedure. Id. ¶¶ 68−71, 88.

Orthopedic surgeons at MGH regularly scheduled two surgeries concurrently in the

morning and in the afternoon of the same day. Id. ¶¶ 68–69. As examples, Wollman has

provided the date, surgeon, scheduled start time, location, duration, and surgery type for

overlapping surgeries that occurred on sixteen different dates between July 2011 and March

2013 and were performed by one of five named surgeons. Id. ¶ 83. In each of these overlapping

surgeries, at least one of the patients involved was Medicare-eligible. Id. ¶ 84. The time periods

during which the patients were under anesthesia was unnecessarily extended by the concurrent

and overlapping scheduling practices. See id. ¶¶ 73, 76, 78–79, 83, 95–96, 101.

Wollman has also provided information on the claims submitted to Medicare and

Medicaid associated with procedures performed on eleven of the patients who received the

overlapping surgeries, including the amount billed, amount paid, dates of the claims, the

physicians listed, and the descriptions of the services billed for. Id. ¶¶ 75–78, 83 nn.36–46.

Although the surgeons who performed concurrent surgeries were rendered unavailable whenever

performing the other concurrently scheduled surgery and were therefore required to designate

another qualified surgeon to assist should the need have arisen, qualified alternative surgeons

were never designated. Id. ¶¶ 11517, 123. Additionally, MGH surgeons generally did not

record the number of physicians involved in cases, which procedures they deemed “key and

critical,” the time at which they entered and exited the surgery room, whether they were

available to return if necessary, and whether another surgery was being conducted at the same

time. See id. ¶ 115; cf. 42 C.F.R. § 415.172(b) (“[M]edical records must document the teaching

physician was present at the time the service is furnished.”). This overly limited record-keeping

was itself a violation of applicable billing rules and helped conceal the arguably more serious

and more dangerous violations of concurrent surgery billing rules meant to ensure the safety of

patients by requiring that a qualified teaching physician be available to assist. See 42 C.F.R.

§ 415.172(b).

Wollman alleges that Defendants’ “informed consent” forms and practices also provided

inadequate information to patients scheduled for concurrent or overlapping surgeries. See SAC

¶¶ 6365, 10214, 123.5 Most patients who were scheduled for such surgeries were not told that

5 In May 2013, MGH’s consent form included the following statement: “My doctor will be there

for the important parts of my procedure/surgery. My doctor will determine what other providers

need to participate in my procedure/surgery and care.” SAC ¶ 104. MGH’s current consent

form dated October 2014 reads:

I understand that [MGH] is a teaching hospital. This means that resident doctors,

doctors in a medical fellowship (fellows) and students in medical, nursing and

related health care professions receive training here, and may take part in my

procedure/surgery. A team of medical professionals will work together to perform

my procedure/surgery. My doctor or an attending designee will be present for all

their attending physician would be attending to another patient while their surgery was ongoing,

and Wollman claims that MGH concealed the fact of concurrent surgeries from patients by

intentionally placing patients who were scheduled to be operated on by the same doctor at the

same time in different rooms for their pre-operative phase. Id. ¶¶ 107–08.

Wollman first raised concerns about MGH’s concurrent surgery practices with MGH’s

senior leadership in May 2012, particularly with regard to a procedure in which the lead surgeon

“never scrubbed into the case” and another surgery in which that same surgeon was seeing

patients in another building on MGH’s campus while his overlapping surgery patients, one of

whom was sedated, waited for his arrival. Id. ¶¶ 119–21.6 The former chairman and chief

executive officer of MGPO told Wollman that MGH had begun an internal investigation of

MGH’s concurrent surgery practices. Id. ¶ 121. The investigation concluded in the spring of

2012 but resulted in minimal changes to MGH’s practices. Id. ¶ 124. When Wollman raised

similar concerns to her supervisors and MGH’s Director of the Operating Rooms about the same

surgeon’s failure to appear in the operating room on another occasion, she was told that she had

violated the privacy rights of patients and that MGH could take disciplinary action against her.

Id. ¶ 98. After reporting to her MGH supervisors that the same surgeon tripled-booked

concurrent surgeries in June 2012, Wollman was prohibited from working on cases with that

surgeon. Id. ¶¶ 12526.

the critical parts of the procedure/surgery, although other medical professionals

may perform some aspects of the procedure as my doctor or the attending designee

deems appropriate.

Id. ¶ 106.

6 Dennis Burke, M.D., a former orthopedic surgeon at MGH, raised similar issues regarding

MGH’s concurrent surgery practices, improper record-keeping, and inadequate informed consent

forms, beginning in February 2011. SAC ¶¶ 118, 128−35.

II. DISCUSSION

The FCA imposes liability on any person who, among other things, “knowingly presents,

or causes to be presented, a false or fraudulent claim for payment or approval,” or “knowingly

makes, uses, or causes to be made or used, a false record or statement material to a false or

fraudulent claim.” 31 U.S.C. § 3729(a)(1)(A)–(B). A “claim” may include “direct requests to

the Government for payment,” in addition to “reimbursement requests made to the recipients of

federal funds under federal benefits programs.” United States ex rel. Verrinder v. Wal-Mart

Corp., No. 13-11147-PBS, 2016 WL 3460310, at *3 (D. Mass. June 21, 2016) (quoting

Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989, 1996 (2016)

(“Escobar II”)). The FCA’s “scienter requirement defines ‘knowing’ and ‘knowingly’ to mean

that a person has ‘actual knowledge of the information,’ ‘acts in deliberate ignorance of the truth

or falsity of the information,’ or ‘acts in reckless disregard of the truth or falsity of the

information.’” Escobar II, 136 S. Ct. at 1996 (quoting 31 U.S.C. § 3729(b)(1)(A)). “[A]

misrepresentation about compliance with a statutory, regulatory, or contractual requirement must

be material to the Government’s payment decision in order to be actionable under the False

Claims Act.” Id. at 2002. The FCA’s materiality requirement defines “‘material’ to mean

‘having a natural tendency to influence, or be capable of influencing, the payment or receipt of

money or property.’” Id. at 1996 (quoting 31 U.S.C. § 3729(b)(4)).

A. Rule 12(b)(6) Motion to Dismiss Standard

To evaluate a motion to dismiss for failure to state a claim under Federal Rule of Civil

Procedure 12(b)(6), the Court must “accept as true all well-pleaded facts alleged in the complaint

and draw all reasonable inferences therefrom in the pleader’s favor.” A.G. ex rel. Maddox v.

Elsevier, Inc., 732 F.3d 77, 80 (1st Cir. 2013) (quoting Santiago v. Puerto Rico, 655 F.3d 61, 72

(1st Cir. 2011)). The complaint must set forth “a short and plain statement of the claim showing

that the pleader is entitled to relief,” and should “contain ‘enough facts to state a claim to relief

that is plausible on its face.’” Id. (first quoting Fed. R. Civ. P. 8(a)(2), then quoting Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “To cross the plausibility threshold a claim does

not need to be probable, but it must give rise to more than a mere possibility of liability.”

Grajales v. P.R. Ports Auth., 682 F.3d 40, 44–45 (1st Cir. 2012) (citing Ashcroft v. Iqbal, 556

U.S. 662, 678 (2009)). “A determination of plausibility is ‘a context-specific task that requires

the reviewing court to draw on its judicial experience and common sense.’” Id. at 44 (quoting

Iqbal, 556 U.S. at 679). “[T]he complaint should be read as a whole, not parsed piece by piece to

determine whether each allegation, in isolation, is plausible.” Hernandez-Cuevas v. Taylor, 723

F.3d 91, 103 (1st Cir. 2013) (quoting Ocasio-Hernandez v. Fortuno-Burset, 640 F.3d 1, 14 (1st

Cir. 2011)). “The plausibility standard invites a two-step pavane.” Maddox, 732 F.3d at 80

(citing Grajales, 682 F.3d at 45). First, the Court “must separate the complaint’s factual

allegations (which must be accepted as true) from its conclusory legal allegations (which need

not be credited).” Id. (quoting Morales-Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir.

2012)). Secondly, the Court “must determine whether the remaining factual content allows a

‘reasonable inference that the defendant is liable for the misconduct alleged.’” Id. (quoting

Morales-Cruz, 676 F.3d at 224).

B. Rule 9(b) Heightened Pleading Standard

Wollman brings her FCA claims under 31 U.S.C. § 3729(a)(1) and therefore must plead

them “with plausibility and particularity under Federal Rules of Civil Procedure 8 and 9(b).”

Escobar II, 136 S. Ct. at 2004 n.6; see United States ex rel. Gagne v. City of Worcester, 565 F.3d

40, 45 (1st Cir. 2009) (“[T]he heightened pleading requirements of Fed. R. Civ. P. 9(b) apply to

claims brought under subsection (a)(1) of the FCA.”). Applying Rule 9(b)’s heightened pleading

standard to FCA claims serves to “give notice to defendants of the plaintiffs’ claim, to protect

defendants whose reputation may be harmed by meritless claims of fraud, to discourage ‘strike

suits,’ and to prevent the filing of suits that simply hope to uncover relevant information during

discovery.” Karvelas, 360 F.3d at 226 (quoting Doyle v. Hasbro, Inc., 103 F.3d 186, 194 (1st

Cir. 1996)). Although the circuits “have varied . . . in their statements of exactly what Rule 9(b)

requires in a qui tam action,” including as to “whether, when, and to what extent a relator must

state the particulars of specific examples of the type of false claims alleged,” the First Circuit has

established a generally applicable standard subject to limited exceptions. United States ex rel.

Nargol v. DePuy Orthopaedics, Inc., 865 F.3d 29, 38 (1st Cir. 2017) (citing Foglia v. Renal

Ventures Mgmt., LLC, 754 F.3d 153, 155−56 (3d Cir. 2014)), cert. denied sub nom. Med.

Device Bus. Servs., Inc. v. U.S. ex rel. Nargol, 138 S. Ct. 1551 (2018).

In Karvelas, the First Circuit established its “general position” on Rule 9(b)’s

particularity requirement for qui tam actions. Nargol, 865 F.3d at 38. In cases that allege a

direct violation of the FCA, “the defendant’s presentation of false or fraudulent claims to the

government is a central element.” Karvelas, 360 F.3d at 232; see also Guilfoile v. Shields, 913

F.3d 178, 188 (1st Cir. 2019) (distinguishing FCA retaliation claims from “direct” claims for

violations of the FCA, and holding that pleading an FCA retaliation claim does not require

adequately pleading the submission of a false claim or otherwise meeting the Rule 9(b) standards

for pleading fraud).7 Thus, “[a] health care provider’s violation of government regulations or

7 The First Circuit has “recognized at least one exception to the expectation that a relator should

be able to allege the essential particulars of at least some actual false claims that were in fact

submitted to the government for payment.” United States ex rel. Nargol v. DePuy Orthopaedics,

Inc., 865 F.3d 29, 39 (1st Cir. 2017). There is “a distinction between a qui tam action alleging

engagement in private fraudulent schemes does not impose liability under the FCA unless the

provider submits false or fraudulent claims to the government for payment based on these

wrongful activities.” Karvelas, 360 F.3d at 232. “[W]rongful activities that result in the

submission of fraudulent claims are included in the ‘circumstances constituting fraud or mistake’

that must be pled with particularity pursuant to Rule 9(b),” but those allegations alone are

generally insufficient “unless they are linked to allegations, stated with particularity, of the actual

false claims submitted to the government that constitute the essential element of an FCA qui tam

action.” Id. (quoting Fed. R. Civ. P. 9(b)).

The relator therefore “must provide details that identify particular false claims for

payment that were submitted to the government.” Id. “[M]erely alleging facts related to a

defendant’s alleged misconduct is not enough . . . . Rather, a [FCA complaint] must ‘sufficiently

establish that false claims were submitted for government payment’ as a result of the defendant’s

alleged misconduct.’” United States ex rel. Ge v. Takeda Pharm. Co., 737 F.3d 116, 124 (1st

Cir. 2013) (emphasis in original) (quoting Rost, 507 F.3d at 732–33); see United States ex rel.

Booker v. Pfizer, Inc., 847 F.3d 52, 57 (1st Cir. 2017) (“That is, even when a relator can prove

that a defendant engaged in ‘fraudulent conduct affecting the government,’ FCA liability

attaches only if that conduct resulted in the filing of a false claim for payment from the

that the defendant made false claims to the government, and a qui tam action in which the

defendant induced third parties to file false claims with the government.” United States ex rel.

Duxbury v. Ortho Biotech Prods., L.P., 579 F.3d 13, 29 (citing United States ex rel. Rost v.

Pfizer, Inc., 507 F.3d 720, 732 (1st Cir. 2007)). A “more flexible” standard of particularity

applies to the latter category. Id. at 30 (citing United States ex rel. Gagne v. City of Worcester,

565 F.3d 40, 46 (1st Cir. 2009); Rost, 507 F.3d at 731-32. Where the defendant allegedly

induced third parties to file false claims with the government, “a relator [can] satisfy Rule 9(b)

by providing ‘factual or statistical evidence to strengthen the inference of fraud beyond

possibility’ without necessarily providing details as to each false claim.” Duxbury, 579 F.3d at

29 (quoting Rost, 507 F.3d at 733).

government.” (quoting Rost, 507 F.3d at 727)). “Because claims of fraud are involved, even at

the pleading stage relators are required under Fed. R. Civ. P. 9(b) ‘to set forth with particularity

[at least] the who, what, when, where, and how of’ an actual false claim alleged to have been

filed because of the defendant’s actions.” Booker, 847 F.3d at 57−58 (quoting Lawton ex rel.

United States v. Takeda Pharm. Co., 842 F.3d 125, 130 (1st Cir. 2016)). Allegations pled on

“information and belief” are also subject to the particularity requirement, as well as the

additional requirement that “the complaint set[] forth the facts on which the belief is founded.”

Karvelas, 360 F.3d at 226, 228 (reiterating that there is “no relaxation of the particularity

requirement for ‘information and belief’ pleading”). Accordingly, a relator cannot “present

general allegations in lieu of the details of actual false claims in the hope that such details will

emerge through subsequent discovery.” Id. at 231.

The Karvelas court further explained the level of specificity expected to meet the

particularity requirement:

[D]etails concerning the dates of the claims, the content of the forms or bills

submitted, their identification numbers, the amount of money charged to the

government, the particular goods or services for which the government was billed,

the individuals involved in the billing, and the length of time between the alleged

fraudulent practices and the submission of claims based on those practices are the

types of information that may help a relator to state his or her claims with

particularity.

Karvelas, 360 F.3d at 233. These details “do not constitute a checklist of mandatory

requirements that must be satisfied by each allegation included in a complaint,” but “some of this

information for at least some of the claims must be [pled] in order to satisfy Rule 9(b).” Id.

(quoting United States ex rel. Clausen v. Lab. Corp. of Am., Inc., 290 F.3d 1301, 1312 n.21

(11th Cir. 2002)). In sum, a relator generally meets the particularity threshold “by alleging with

particularity examples of actual false claims submitted to the government.” D’Agostino v. ev3,

Inc., 845 F.3d 1, 10 (1st Cir. 2016). “By doing so, the relator conveys that if the facts alleged are

true, the filing of a false claim is not merely a possibility, but rather, necessarily occurred.” Id.

C. Analysis

Defendants make four arguments as to why this case should be dismissed. First, they

assert that Wollman has not pled fraud with the particularity required by Federal Rule of Civil

Procedure 9(b). [ECF No. 92 at 6–10]. Second, Defendants argue that Wollman has not alleged

violations of billing rules related to concurrent or overlapping surgeries, unnecessary anesthesia,

or inadequate informed consent. Id. at 10–13, 17–19. Third, Defendants assert that even if their

practices violated CMS rules, such violations were not material to payment. Id. at 5–6, 14–19.

Fourth, Defendants claim that Wollman has not adequately plead scienter. Id. at 19–20. For the

reasons explained below, the Court finds these arguments unavailing.

Wollman has pled fraud with sufficient particularity. As in Karvelas, 360 F.3d 220,

Wollman is a medical care provider (an anesthesiologist) who was formerly employed at the

defendant hospital and alleges that Defendants submitted claims for Medicare and Medicaid

payments for surgeries that were improperly performed under CMS’s standards for

reimbursement. SAC ¶ 14. She provides notable detail with respect to the commonplace

occurrence of overlapping surgeries at MGH, including the date, surgeon, start time, location,

duration, and type of surgery for numerous procedures. E.g. id. ¶¶ 83, 97. As discussed further

infra, Wollman has plausibly alleged that many of the surgeries that she provides detailed claim

records for were conducted in violation of billing rules. Unlike Karvelas, where the relator

provided “no identification numbers or amounts charged in individual claims for specific . . .

services,” Karvelas, 360 F.3d at 233, Wollman has provided specific dates, identification

numbers, amounts billed, services, individuals involved, and amounts paid for several claims that

relate to improperly conducted overlapping and concurrent surgeries.8 The examples of

fraudulent claims in Wollman’s Second Amended Complaint are sufficiently particular to satisfy

Rule 9(b). See Gagne 565 F.3d at 45 (holding that Rule 9(b) may be satisfied “where, although

some questions remain unanswered, the complaint as a whole is sufficiently particular to pass

muster under the FCA”); Karvelas 360 F.3d at 233 (requiring “some of this information for at

least some of the claims must be [pled] in order to satisfy Rule 9(b)”); United States ex rel.

Westmoreland v. Amgen, Inc., 738 F. Supp. 2d 267, 276 (D. Mass. 2010) (“pleading every

instance of fraud would be extremely ungainly, if not impossible” (quoting United States ex rel.

Franklin v. Parke-Davis, 147 F. Supp. 2d 39, 49 (D. Mass. 2001))).

Wollman has pled facts that, taken as true, show that the example claims at issue were

false. See Guilfoile, 913 F.3d at 188. She has documented more than ten pairs or trios of

surgeries that were carried out in violation of the rules governing concurrent or overlapping

surgeries. See SAC ¶¶ 1,3 6, 7, 73–84, 118–25. Further, she asserts that the surgeons involved

failed to designate a qualified teaching physician who would be able to assist when the primary

surgeon was absent and unavailable, that these practices resulted in unnecessarily prolonged

anesthesia, that MGH used a relatively non-descript informed consent form and routinely took

8 Cf. United States ex rel. Gagne v. City of Worcester, 565 F.3d 40, 47 (1st Cir. 2009) (finding

that particularity standard was not met where relators failed to “connect the only falsity or fraud

for which they provide any detail . . . to an effort to get a false claim paid or approved by the

government”); United States ex rel. Verrinder v. Wal-Mart Corp., No. 13-cv-11147, 2016 WL

3460310, at *6 (D. Mass. June 21, 2016) (relator, a former pharmacist at Kmart, “provided some

details about [the] allegation against Kmart, indicating where this practice occurred, how the

fraud was perpetrated, and who participated,” but failed to satisfy Rule 9(b) because he did “not

identify one false claim submitted to Medicare or Medicaid as a result of this scheme”); United

States ex rel. Driscoll v. Serono Inc., No. 00-cv-11680, 2008 WL 728939, at *3 (D. Mass. Mar.

18, 2008) (finding Rule 9(b) not satisfied where the allegations “outline[d] a fraudulent scheme,

but they fail[ed] to identify a single particular false claim submitted for payment by any of the

pharmacy defendants to any governmental agency at any time”).

other affirmative steps to conceal the practice of concurrent and overlapping surgeries from

patients that resulted in a lack of informed consent, and that surgeons falsified or failed to keep

accurate records to conceal their practices. Id. ¶¶ 1, 3, 6–8, 73–83, 102–09, 115–38. Finally,

Wollman’s assertions imply that Defendants falsely certified compliance with the applicable

regulations and billing rules when they submitted claims to Medicare and Medicaid. See id.

¶ 41. Taken as true, these allegations show that Defendants violated the billing rules discussed

supra at Section I.A and submitted claims to Medicare and Medicaid that falsely asserted that the

services provided complied with applicable regulations and rules.9

Wollman has also plausibly alleged that these violations of regulations and billing rules

were, at least in conjunction with each other, material to the government’s decision to pay

Defendants’ claims. The materiality analysis requires a “holistic approach” that considers three

non-dispositive factors: (1) whether regulatory compliance was a condition of payment; (2) the

centrality of the relevant requirements in the regulatory program; and (3) whether the

government paid out on particular claims despite actual knowledge that the supposedly material

requirements had been violated. See United States ex rel. Escobar v. Universal Health Servs.,

9 Defendants correctly assert that a physician is permitted to bill Medicare for an overlapping

surgery where the physician (i) is “present for . . . the critical or key portions of both surgeries

(and those portions of the initial surgery must be complete before the physician becomes

involved in the second surgery); (ii) document[s] in the medical record the teaching physician’s

presence during these critical or key portions of both procedures; and (iii) when the teaching

surgeon is not present, arrange[s] for a qualified surgeon to immediately assist should the need

arise.” [ECF No. 92 at 5 (citing 42 C.F.R. § 415.172(a))]. Wollman plausibly asserts that these

rules, among others, were violated by documenting numerous simultaneously scheduled

surgeries that included at least one surgery for which a government payor was billed, by alleging

that surgeons never designated alternative qualified surgeons to be immediately available should

a need arise, by stating that she witnessed surgeons engaged in surgery while another of their

patients was undergoing surgery elsewhere, and by providing details about the claims that were

submitted for reimbursement from and paid by the government that are consistent with her

assertions.

Inc., 842 F.3d 103, 110 (1st Cir. 2016) (“Escobar III”). Here, Defendants allegedly engaged in a

scheme that allowed them to collect for services provided by residents and fellows outside the

presence of a teaching physician, which violated a “condition[] for payment.” 42 C.F.R.

§ 415.170; SAC ¶ 42. They also collected for concurrent and overlapping surgeries that violated

CMS rules by deceiving the government and beneficiaries through noncompliant record-keeping,

under-descriptive informed consent forms, and active concealment of concurrent surgeries.

Although the billing requirements may not be among the most central to the Medicare and

Medicaid programs overall, they are sufficiently central to the payment scheme for concurrent

and overlapping surgeries to have received congressional attention and expressions of concern

over noncompliance. See Staff of S. Comm. On Fin., 14th Cong., Concurrent and Overlapping

Surgeries: Additional Measures Warranted (Dec. 6, 2016),

https://www.finance.senate.gov/imo/media/doc/Concurrent%20Surgeries%20Report%20FINAL

%20.pdf (“Senate Staff Report”). Additionally, accepting the allegations in the Second

Amended Complaint and drawing reasonable inferences in Wollman’s favor, Defendants’

noncompliance with the billing rules cannot reasonably be described as “minor or insubstantial,”

and there is no evidence from which the Court can infer that the government was aware of the

violations at issue. See Escobar II, 136 S. Ct. at 2003.10 Wollman has adequately alleged

materiality at this stage of the proceedings considering the billing requirements, their importance

10 Defendants argue that the violations of billing rules were not material because the government

pays claims for overlapping surgeries that comply with the billing rules and because the

December 2016 Senate Staff Report stated that CMS did not plan to change the rules for

concurrent surgeries. [ECF No. 92 at 17]. The surgeries at issue here, however, allegedly did

not comply with the current CMS billing rules. Further, the Senate Staff Report found CMS had

“never undertaken a study to determine whether the surgical procedures Medicare paid for met

CMS’s billing requirements specific to overlapping surgeries performed in teaching hospitals,”

which suggests that CMS was not aware of the scope of billing violations at MGH or elsewhere.

Senate Staff Report at 6.

to the regulatory program, and the lack of clear evidence showing the non-materiality of the

violations alleged. See United States ex rel. Scutellaro v. Capitol Supply, Inc., No. 10-cv-1094,

2017 WL 1422364, at *21 (D.D.C. Apr. 19, 2017) (denying motion for summary judgment on

materiality grounds despite “mixed signals” from government officials about the strength of

company’s compliance with disclosure requirements concerning the geographic origin of its

products).

Wollman has also adequately pled scienter. “Malice, intent, knowledge, and other

conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). The FCA

prohibits “knowingly” presenting a false or fraudulent claim, or making, using, or causing a false

record or statement to be made that is material to a false or fraudulent claim. 31 U.S.C.

§ 3729(a)(1)(A)–(B). “Knowingly” includes acting in deliberate ignorance of the truth or falsity

of relevant information or reckless disregard of the truth or falsity of the information, and

“require[s] no proof of specific intent to defraud.” 31 U.S.C. § 3729(b)(1). To the extent that

Wollman is required to plead scienter, she has adequately done so by identifying specific

allegedly false claims and alleging a broader scheme to defraud Medicare and Medicaid that was

supported by active concealment of concurrent surgeries from patients and intentionally

restricted record-keeping practices designed to avoid government detection. SAC ¶¶ 3, 6–81 87–

88. She has also described a reaction to internal allegations of non-compliance that, construed in

the light most favorable to Wollman, suggests a deliberate indifference and reckless disregard for

the trust or falsity of the alleged non-compliance with applicable regulations and rules. Id.

¶¶ 78–82, 118–34. Although Defendants correctly point out that certain of the regulatory

requirements leave some determinations to the discretion of surgeons, such as what portions of

surgeries are “key,” e.g. 42 C.F.R. § 415.172(a) (requiring “teaching physician [to be] present

during the key portion of any service or procedure for which payment is sought”); 130 Mass.

Code Regs. 450.275 (requiring “medical record [to] clearly substantiate[] that the key portions of

the services [were] personally provided by a teaching physician”), discovery is needed to

determine whether Defendants’ surgery scheduling, record-keeping, and informed consent

practices were part of a good-faith effort to fully comply with a less than perfect regulatory

regime or reflect a more sinister motive.

IV. CONCLUSION

Accordingly, Defendants’ motion to dismiss for failure to state a claim [ECF No. 91] is

DENIED.

SO ORDERED.

June 17, 2019 /s/ Allison D. Burroughs

ALLISON D. BURROUGHS

U.S. DISTRICT JUDGE