Appendix — Allina Health System Corp. v. United States Ex Rel. Minnesota Association of Nurse Anesthetists

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No.0 2 2:7 JUN 27 2002

OFRICE OF THE CLERK

In The

Supreme Court of the Anited States

ALLINA HEALTH SYSTEM CORP,, ET AL.,

Petitioners,

UNITED STATES OF AMERICA, EX REL.

MINNESOTA ASSOCIATION OF

NURSE ANESTHETISTS,

Respondent.

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

APPENDIX

VOLUME II, PAGES 226 to 474

JOHN D. FRENCH

Counsel of Record for Petitioners

FAEGRE & BENSON LLP

2200 Wells Fargo Center

90 South Seventh Street

Minneapolis, MN 55402-3901

(612) 766-7000

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

APPENDIX TABLE OF CONTENTS

Page

Volume I

United States ex rel. Minnesota Ass’n of Nurse

Anesthetists v. Allina Health System, et al., Ap-

peal No. 99-2356 (Slip Op. 8th Cir. Jan. 17, 2002)

(276 F.3d 1032 (8th Cir. 2002)................ccccccsssseeee App. 1

United States ex rel. Minnesota Ass’n of Nurse

Anesthetists v. Allina Health System, et al., Civ.

No. 4-96-734 (Slip Op. D. Minn. Sept. 24, 1997) .. App. 49

United States ex rel. Minnesota Ass’n of Nurse

Anesthetists v. Allina Health System, et al., Civ.

No. 4-96-734 ADM/AJB (Slip Op. D. Minn. Mar.

Bh an isitsistasienbsly iianaaviatexteuncbileneacbiiseersuiarn App. 60

United States ex rel. Minnesota Ass’n of Nurse

Anesthetists v. Allina Health System, et al., Ap-

peal No. 99-2356 (Order denying Motion to Stay

Issuance of the Mandate, May 23, 2002).............. App. 83

United States ex rel. Minnesota Ass’n of Nurse

Anesthetists v. Allina Health System, et al., Ap-

peal No. 99-2356 (Order denying Petition for

Rehearing and for Rehearing En Banc, March 25,

En iicttlighidesraiktint nee ecdakaseniiidtunns ecbpmuibcascssecinasn kates App. 84

Statutory and Regulatory Provisions Involved........ App. 85

MANA’s Complaint in the AntiTrust Action (No-

Se ii, SE csi icincnseciassjnivbuntinianiicebisediovaicassasiaplecnese App. 159

Borger, Judith Yates, “Nurses File Suit Against 3

Hospitals Nurse Anesthetists Say Conspiracy

Ended Jobs,” Pioneer Press, November 10, 1994,

TABLE OF CONTENTS -— Continued

Page

Larus, Christopher K., “Suit Accuses Hospitals

of Conspiracy,” St. Cloud Times, November 11,

LOOS .......-0ssnnesiscicnenesinntsiesiicimeaplnadaidaiaaainaaniaba dain App.

MANA’s First Complaint in the Qui tam Action

(December BB, WG a. ccsscscinncstivnbivisaeuainaens App.

Volume II

MANA’s Third Amended Complaint in the Qui tam

Action (March: 90, BDF Riscsiisiscssiscssetnnnicetinenns App.

Excerpts from deposition of Medicare Carrier

(Travelers) representative Patrick Donohue,

Samaary G, WG cccesesesnciscsmnniniaiaaasaales App.

United States Department of Justice, Press Re-

lease, February 24, 2000..............ccccccccsscceceeeeeeees App.

Holder, Eric H., Deputy Attorney General, “Guid-

ance On the Use of the False Claims Act in Civil

Health Care Matters,” June 3, 1998................... App.

Articles of Incorporation of MANA, a Minnesota

NON-PFOfit COTPOTALION ............cccccccceceeeeeeeececeeeeees App.

Affidavit of Marcy Victoria Yarns, Manager of

Regulatory Billing for Allina Health System

Consolidated Business Office..................ssseeccceees App.

Medicare News, September 1993. Newsletter from

the Travelers to provider communities .............. App.

Medicare Newsletter, April 1994. Newsletter from

BlueCross . BlueShield of Minnesota to Part B

PROTEIN ....001s0rscnsnrinenmianinaianaaaamiil App.

Letter from Daniel Roach, attorney for Health Span

Systems Corp., to Patrick Dorohue, the Travel-

eae, Baas TE, Be es iciicecsciscsicevmnbiensopiaieeeteaion App.

203

206

226

333

338

342

352

372

374

377

ill

TABLE OF CONTENTS - Continued

Page

Letter from Patrick Donohue, the Travelers, to

Daniel Roach, attorney for Health Span Systems

Corp., March 25, 1998..........sssessessrerereersrerennenes App. 388

Fax from Charles R. Booth, HCFA, to Travelers,

July 27, 1998 ........scscercscereecessssesrencensnensenseesneseenens App. 390

Analysis of Carrier Correspondence, prepared by

Brenda Morrow, Defendants’ Expert, February,

ME oc scdunmuviabeebasvsennenonescedpeshensnivasipietensase App. 393

Report of James F. Arens, M.D., Defendants’

Expert, December 12, 1997.........:::ssssseserrereeners App. 411

Report of Bertran W. Coffer, M.D., Defendants’

Expert, December 5, 1997...........ssseserssrerresennees App. 445

Affidavit of Kathy Parsons, Director of Managed

Care Contracting for St. Cloud Hospital, J uly 30,

DE ccvacscoussurososessvsnenstnsvonvecsegbiossoosocsoresosenens App. 457

Exhibits to Parsons’s Affidavit

Letter to Kathy Parsons, Director of Managed

Care Contracting for St. Cloud Hospital, from

Linda Mack, Assistant to the Medical Director

Government Programs, August 28, 1989........... App. 461

Letter to Mary Stotko, Business Office, St. Cloud

Hospital, from Linda Krecklau, Professional Re-

lations Representative, Medicare, August 29,

TOT. csasncsetvasenecesbabubvessienovesovenssoucsssscsosonvonenonee App. 463

BlueCross BlueShield Interoffice Memorandum

from Kathy Henry to Becky Timm, November 15,

DT . _-. -. cccpadounuweceserbubeneveosssvoreesenerevesosecersouseess App. 467

Excerpts from Deposition of defendant Mark

Sperry, M.D., May 15, 1996.........s-sssssessssrsseserees App. 469

App. 226

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MINNESOTA

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UNITED STATES OF AMERICA, Civil Action

ex rel MINNESOTA ASSOCIATION File No.

OF NURSE ANESTHETISTS, 4-96-734

ALLINA HEALTH SYSTEM CORP.,

UNITY HOSPITAL, MERCY HOSPI-

TAL, JOHN MURPHY, MIDWEST

ANESTHESIOLOGISTS, P.A., MET-

ROPOLITAN ANESTHESIA NET- THIRD

WORK, ALLEN TANK, HEALTH AMENDED

BILLING SYSTEMS, INC., THELMA COMPLAINT

+’

M. ALBAY, M.D., GARY BAGGEN-

STOSS, M.D., MINDA CASTILLEJOS,

M.D., DAVID CUMMING, M.D., TERI

HEIL, M.D., SANG HONG, M.D., TED

JANOSSY, M.D., RAYMOND KLOEP-

PER, II, M.D., JOHN MAGDSICK,

M.D., THOMAS MAGGS, M.D., THO-

MAS POLTA, M.D., JOHN ROSE-

BERG, M.D., JAI SUH, M.D., MARK

SPERRY, M.D., JEFFREY YUE, M.D.,

and JOHN RYDBERG, M.D., ST.

CLOUD HOSPITAL, ANESTHESIA

ASSOCIATES OF ST. CLOUD LTD.,

GARY A. BOEKE, M.D., PHILIP F.

BOYLE, M.D., L. MICHAEL ESPE-

LAND, M.D., ALAN D. ESPELIEN,

M.D., PAUL J. HALVERSON, M.D.,

CRAIG JOHNSON, M.D., LANSE C.

LANG, M.D., A. WADE McMILLAN,

M.D., WILLIAM H. RICE, M.D.,

ALLAN REITZ, M.D., ANNETTE E.

App. 227

ZWICK, M.D., ANESTHESIOLOGY,

P.A., ABBOTT NORTHWESTERN

HOSPITAL, NORTHWEST ANES-

THESIA, P.A., BRYCE BEVERLIN,

M.D., RICHARD BLOMBERG, M.D.,

JEAN BOENING, M.D., MITCHELL

BURKE, M.D., RAJARAO DWARA-

KANATH, M.D., RICHARD ENG-

WALL, M.D., JAMES GAYES, M.D.,

LUIS GIRON, M.D., NANCY GROVES,

M.D., JONATHAN GUDMAN, M.D.,

RICHARD JOHNSON, M.D., JOHN

LILLEHEI, M.D., ROBERT

McKLVEEN, M.D., JUDITH MEIS-

NER, M.D., MICHAEL MENZEL,

M.D., JAMES MUSICH, M.D., MARK

NISSEN, M.D., XAVIER PEREIRA,

M.D., DAVID PLUT, M.D., JEFFREY

SHAW, M.D., RICHARD SKOOG,

M.D., WILLIAM STAUFFER, M.D.,

OFELIO TIU, M.D., ROBERT

TRONNIER, M.D., JOHN WINTER-

MUTE, M.D., and [other unknown

defendants], Does I through XX

Defendants.

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Plaintiffs as and for their Third Amended complaint

against defendants say:

JURISDICTION AND VENUE

1. This is an action to recover damages and civil

penalties on behalf of the United States of America arising

out of false and/or fraudulent claims presented by Defen-

dants under the Federal Medicare Program. This action

App. 228

arises under the provisions of Title 31 U.S.C. Section 3729,

et seq. popularly known as the False Claims Act which

provides that the United States District Courts shall have

exclusive jurisdiction of actions brought under that Act.

29. Under Section 3732(A), venue is proper in this

District because defendants reside in this District and the

acts complained of herein occurred in the State of Minne-

sota, within this judicial district.

PARTIES TO THE ACTION

3. Qui tam Plaintiff Minnesota Association of Nurse

Anesthetists (“MANA”) is an association formed for the

purpose of preserving and advancing the profession of

Certified Registered Nurse Anesthetists (“CRNAs”) in

Minnesota and to engage in activities to promote and

protect the legal rights of its members through, among

other things, lobbying efforts, legal action and public

relations activities. MANA has standing to bring this

complaint for itself and on behalf of the United States

Government pursuant to 31 U.S.C. § 3730. Various of

MANA’s members were employed by defendant hospitals

at times relevant to this complaint. Hereafter, MANA will

alternatively be referred to as “Relator.”

4. Under the Act, the Complaint must be filed in

camera and remain under seal for a period of at least sixty

(60) days and shall not be served on the Defendant until

the Court so orders. The Government may elect to inter-

vene and proceed with the action in sixty (60) days after it

receives both the Complaint, and the material evidence

and information or to authorize the Relator to prosecute

the action on the Government's behalf. Plaintiffs have

complied with these provisions.

App. 229

5. On May 17, 1995, the Government requested the

Court to unseal this action and authorized MANA to

pursue the action in the name of the United States. The

Court unsealed the action by Order dated May 23, 1995.

Since that time the Government hes monitored the action

and reviewed copies of discover, motions and pleadings in

the case.

6. As required under the False Claims Act, 31 U.S.C.

§ 3730 (a) (2), Relator has provided to the Attorney Gen-

eral of the United States and to the United States Attor-

ney for the District of Minnesota, simultaneous with the

filing of the Complaint, a statement of material evidence

and information in Relator’s possession related to the

Complaint as well as a copy of this Complaint. The disclo-

sure statement supports the existence of overcharges and

false claims by the defendants. MANA is the original

source of this information under the Act.

7. Defendant Allina Health System Corp. (“Allina”)

is a nonprofit corporation and integrated health care

system.

8. Defendant Unity Hospital (“Unity”) is a hospital

operating at 550 Osborne Road in Fridley, Minnesota.

9. Defendant Mercy Hospital (“Mercy”) is a hospital

operation at 4050 Coon Rapids Boulevard in Coon Rapids,

Minnesota.

10. Defendant John Murphy currently and was at all

times pertinent hereto Vice President of Unity and Mercy

Hospitals. He was personally advised by CRNA members

of MANA of the fraud alleged herein in 1992.

11. Defendant Midwest Anesthesiologists, P.A.

(“MAPA”) is a Minnesota professional association which

App. 230

engages in, among other things, the provision of anesthe-

sia services to the defendants Unity and Mercy Hospitals.

12. Defendant Metropolitan Anesthesia Network

(“MAN”) is a professional corporation which owns and

controls MAPA, as well as other professional associations

with anesthesiologists with privileges at Unity and several

other Minnesota Hospitals.

13. Health Billing Systems, Inc. (“HBS”) is a Minne-

sota corporation which is owned and controlled by MAN

and is responsible for providing billing services to MAN

and MAPA employees. On information and belief, Allen

Tank is a principal of HBS.

14. Defendant Allen Tank (“Tank”) at all times

pertinent hereto was an employee of either HBS, MAN or

MAPA and performed business management functions for

these groups, including billings for anesthesia which it is

alleged were deceptive and fraudulent.

15. Defendants Thelma M. Albay, M.D. (“Albay”),

Gary Baggenstoss, M.D. (“Baggenstoss”), Minda Cas-

tillejos, M.D. (“Castillejos”), David Cumming, M.D.

(“Cumming”), Teri Heil, M.D. (“Heil”), Sang Hong, M.D.

(“Hong”), Ted Janossy, M.D. (“Janossy”), Raymond Kloep-

per, Il, M.D. (“Kloepper”), John Magdisick, M.D.

(“Magdsick”), Thomas Maggs, M.D. (“Maggs”), Thomas

Polta, M.D. (“Polta”), John Roseberg, M.D. (“Roseberg”),

Jai Suh, M.D. (“Suh”), Mark Sperry, M.D. (“Sperry”),

Jeffrey Yue, M.D. (Yue”) and John Rydberg, M.D.

(“Rydberg”) are medical doctors specializing in anesthesia

(“MDAs”) who maintained privileges at Unity and/or

Mercy Hospitals at all times relevant to this Complaint

and are members of MAPA (hereinafter collectively the

“Unity/Mercy MDAs”).

App. 231

16. The defendants named in paragraphs 7 through

15 shall be collectively referred to as the “Unity/Mercy

defendants”.

17. Defendant St. Cloud Hospital (“St. Cloud”) is a

hospital operating at 1406 6th Avenue N., St. Cloud, Minne-

sota 56303.

18. Defendant Anesthesia Associates of St. Cloud

Ltd. (“AASC”) is a professional partnership located at 816

West St. Germain St. Suite 403, St. Cloud, Minnesota

56301, whose anesthesiologists members maintain privi-

leges at St. Cloud Hospital.

19. Defendants Gary A. Boeke, M.D. (“Boeke”),

Philip F. Boyle, M.D. (“Boyle”), L. Michael Espeland, M.D.

(“Espeland”), Alan D. Espelien, M.D. (“Espelien”), Paul J.

Halverson, M.D. (“Halverson”), Craig Johnson, M.D.

(“Johnson”), Lanse C. Lang, M.D. (“Lang”) and A. Wade

McMillan, M.D. (“McMillan”), William H. Rice, M.D.

(“Rice”), Allan Reitz, M.D. (“Reitz”) and Annette E. Zwick,

M.D. (“Zwick”) are medical doctors specializing in anesthe-

sia (“MDAs”) who maintained privileges at St. Cloud

Hospital at all times relevant to this Complaint and are

members and/or employees of AASC.

20. Defendants » paragraphs 17 through 19 will

hereinafter collectively be referred to as the “St. Cloud

defendants.”

21. Defendant Anesthesiology, P.A. (“APA”) is a

professional association which, among other things,

provides anesthesia services to North Memorial Hospital.

22. Defendant Abbott Northwestern Hospital is a

hospital operating at East 28th Street, Minneapolis,

App. 232

Minnesota. Abbott Northwestern is owned by defendant

Allina.

23. Defendant Northwest Anesthesia, P.A. (“NWA”)

is a Minnesota professional corporation which, among

other things, provides anesthesia services to Abbott

Northwestern.

24. Defendants Bryce Beverlin, M.D. (“Beverlin”),

Richard Blomberg, M.D. (“Blomberg”), Jean Boening, M.D.

(“Boening”), Mitchell Burke, M.D. (“Burke”), Rajarao

Dwarakanath, M.D. (“Dwarakanath”), Richard Engwall,

M.D. (“Engwall”), James Gayes, M.D. (“Gayes”), Luis

Giron, M.D. (“Giron”), Nancy Groves, M.D. (“Groves”),

Jonathan Gudman, M.D. (“Gudman”), Richard Johnson,

M.D. (“Johnson”), John Lillehei, M.D. (“Lillehei”), Robert

McKlveen, M.D. (“McKlveen”), Judith Meisner, M.D.

(“Meisner”), Michael Menzel, M.D. (“Menzel”), James

Musich, M.D. (“Musich”), Mark Nissen, M.D. (“Nissen”),

Xavier Pereira, M.D. (“Pereira”), David Plut, M.D. (“Plut”),

Jeffrey Shaw, M.D. (“Shaw”), Richard Skoog, M.D.

(“Skoog”), William Stauffer, M.D. (“Stauffer”), Ofelio Tiu,

M_D. (“Tiu”), Robert Tronnier, M.D. (“Tronnier”) and John

Wintermute, M.D. (“Wintermute”) are medical doctors

specializing in anesthesia (“MDAs”) who maintained

privileges at Abbott Northwestern Hospital at all times

relevant to this Complaint and are members and/or

employees of NWA (hereinafter collectively the “Abbott

Northwestern MDAs”).

25. Defendants in paragraphs 22 through 24 will

hereinafter collectively be referred to as the “Abbott

Northwestern” defendants.

App. 233

26. Plaintiffs sue fictitious defendants Does I

through XX, inclusive, because their names and/or capaci-

ties and/or facts showing them liable are not presently

known.

27. All of the Hospital defendants named above shall

hereinafter alternatively be referred to as “the defendant

hospitals.”

28. All of the anesthesiologist defendants and their

professional associations named above shall hereinafter be

collectively alternatively referred to as “the defendant

anesthesiologists.”

THE ROLES OF ANESTHESIOLOGISTS AND OF

CRNAs IN THE PROVISION OF ANESTHESIA

29. Anesthesia is a medical specialty which deals

with the management of procedures for rendering a

patient insensible to pain during surgical, obstetrical and

certain other medical procedures; the support of life

functions under the stress of anesthetic and surgical

manipulation; the clinical management of the patient

unconscious for whatever cause; the management of

problems in cardiac and respiratory resuscitation; the

application of specific methods of inhalation therapy; and

the clinical management of various fluid electrolyte and

metabolic disturbances.

30. Certified registered nurse anesthetists are a

group of health providers who are virtually unknown to

the public at large, yet they administer more the 65% of

the 26 million anesthetics given to patients each year in

the United States. In 85% of rural hospitals, CRNAs are

the sole anesthesia providers providing all aspects of

anesthesia, including obstetrical, surgical and trauma

stabilization services. While anesthesiologists, who are

physicians, are often involved in the delivery of anesthesia

services as part of an anesthesia care team, they are

frequently absent from the operating room during the

administration of anesthesia and for long periods of time

during the surgery. It is the CRNA who, in most cases,

performs the majority of the anesthesia services and who

stays in the operating room with the patient and the

surgeon throughout the operation.

31. The principal activity of most anesthesia previd-

ers who are in the clinical practice of medicine is in con-

nection with the performance of surgery in a hospital.

Ordinarily the patient about to undergo surgery does not

choose his anesthesia provider. That decision is usually

made by the surgeon or assigned to the patient’s case by

the operating room supervisor or head of the anesthesia

department. It is not uncommon for a patient to have his

first contact with the anesthesia provider just prior to

being brought into the operating room for surgery.

32. Historically, since World War II, while anesthe-

sia services have been provided in a variety of settings,

including CRNAs only, anesthesiologists only, and CRNAs

under the direction of physicians or anesthesiologists, the

majority of anesthesia care in the United States has been

provided by way of anesthesia care teams. The anesthesia

care teams are made up of a number of CRNAs who

provide the majority of the anesthesia and related services

under the direction of and/or supervision of an anesthesi-

ologist. Such teams are the most cost effective method of

providing anesthesia care since they utilize lower cost

providers, CRNAs, and they minimize the involvement of

App. 235

substantially higher cost providers, anesthesiologist

MDAs.

MEDICARE REGULATIONS RELEVANT

TO DEFENDANTS’ FALSE CLAIMS

33. Since, on average, hospitals in the Twin Cities

area, including defendant hospitals, that provide general

surgical services provide approximately 30% of those

services to Medicare related patients, Medicare strongly

affects the way those hospitals operate. In addition, many

private insurers look to Medicare regulations to guide

their insurance reimbursement policies.

34. Reimbursement for the provision of anesthesia

services has been treated uniquely by Medicare.

35. Prior to 1982, anesthesiologists billed under Part

B of Medicare as independent health care practitioners,

whereas CRNAs’ costs were billed by the hospital under

Part A as part of the general costs of providing Medicare

services.

36. Under pre-1982 Medicare regulations, anesthesi-

ologists were permitted to supervise as many CRNAs as

they wished and to bill for as many cases simultaneously

as they wished. There was no limit of the number of

concurrent cases for which an anesthesiologists could

receive reimbursement for medically directing CRNAs,

even though the direct participation of the MDA may have

been minimal.

37. In 1982, in part as a result of what was believed

to be widespread fraudulent billing practices by MDAs, the

Tax Equity and Fiscal Responsibility Act of 1982

App. 236

(“TEFRA”) was enacted, establishing conditions for anes-

thesiologists to fulfill in order to be paid for medically

directing CRNAs. Those conditions were:

(a) Performs a pre-anesthesia examination and

evaluation; |

(b) Prescribes the anesthesia plan;

ing procedures of the anesthesia plan, in-

cluding induction and emergence,

(d) Ensures that any procedures in the anes-

thesia plan that he or she does not perform

are performed by a qualified anesthetist;

(e) Monitors the course of anesthesia

administration at frequent intervals;

(f) Remains physically present and available

for immediate diagnosis and treatment of

emergencies; and

(g) Provides indicated post anesthesia care.

38. Subsequently Congress passed the Omnibus

Budget Reconciliation Act of 1986 (“OBRA ‘86”), which

established the ability for CRNAs to bill directly under

Medicare Part B effective January 1, 1989. In practice,

since most CRNAs were employed by hospitals, they

assigned their independent billing rights to the hospitals,

which billed Medicare for the CRNAs’ services.

39. Another crucial change which was introduced in

OBRA ’86 was a change in the methodology for payment of

anesthesiologists and nurse anesthetists. 42 C.F.R.

414.450 provided that, in most cases where an anesthesi-

ologists was engaged in a single procedure and was not

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App. 237

involved in any other concurrent cases, the anesthesiolo-

gists would be paid 100% of the cost of the procedure

regardless of whether any nurse anesthetists was in-

volved. Thus, in such cases, often referred to as “one-on-

ones,” the anesthesiologists may be paid for 100% of the

work even if the CRNA performs the work. In contrast, if

an anesthesiologist is involved in two, three or four con-

current cases, he will receive only a portion of the allo-

cated cost of the procedure and the other portion will be

paid to the CRNA. This change was crucial because it

permitted an MDA, by fraudulently billing concurrent

cases as “one-on-ones,” to increase the amount he was paid

by Medicare substantially beyond that which he should

have been paid.

DEFENDANTS’ FALSE CLAIMS

40. This Qui Tam complaint is based upon the fact

that for years the defendant anesthesiologists, with the

knowledge and active assistance of the defendant hospi-

tals, have been billing Medicare for services which they

either did not perform or which did not qualify for reim-

bursement under the applicable Medicare laws and regu-

lations. In particular, while the Medicare regulations

pertaining to reimbursement for anesthesia services have

been amended from time to time, since January 1988 an

anesthesiologists was only entitled to be personally reim-

bursed for services provided by him in three specific

situations, two of which are relevant here: (1) where he

personally performs the anesthesia procedure; and (2)

where he medically directs another qualified anesthesia

provider (such as a CRNA) in connection with two, three

or four procedures.

41. In order to be reimbursed for personally perform-

ing the anesthesia procedure, the anesthesiologist is

required to either (1) “personally perform the entire

anesthesia procedure (42 C.F.R. 414.46 (2) (i); or (2) be

“continuously involved in a single case involving a certified

registered nurse anesthetist (“CRNA”), an anesthesiologist

assistant (“AA”) or a student nurse anesthetist” (42 C.F.R.

414.46 (2) (ii)). Cases where one MDA works with one

CRNA are often referred to as “one-on-one” cases.

42. In order to be continuously involved in a single

case, the anesthesiologist must be present in the operating

room for the entire time. In particular, 42 C.F.R. 4:14.46

provides that billing for anesthesia services is based upon

base units which assign a value to each anesthesia proce-

dure and “time units” which “involve the continuous actual

presence of the physician ... and starts when he or she

begins to prepare the patient for anesthesia ... and ends

when the anesthesiologist ... is no longer in personal

attendance.” In contrast, where the physician is “medically

directing” a CRNA which may only occur in connection

with two, three or four concurrent procedures, time units

may be billed based on the “presence” of the “medically

directed” CRNA. Because the MDA must be present with

the CRNA at all times to be reimbursed for personally

performing a procedure, Section 4:14.46 also provides that

where the anesthesiologist personally performs the proce-

dure, he receives the full fee and no payment will be made

to the CRNA unless the CRNA’s presence is “medically

necessary”. See 42 C.F.R. 4:14.46 (c) (3). The requirement

that an anesthesiologist must be in the operating room for

the entire time if he seeks to be reimbursed for personally

performing a procedure and may not be engaged for any

amount of time in other activities was confirmed on

App. 239

numerous occasions in letter interpretations issued by the

Department of Health & Human Services. On December 9,

1987 the Director of the Office of Reimbursement Policy,

Bureau of Eligibility, Reimbursement Coverage responsi-

ble for officially interpreting Medicare regulations regard-

ing reimbursement wrote to St. Cloud defendants’

Medicare carrier, Blue Shield and stated the following:

“It is our opinion that 42 CFR 405.552 (a) (2) re-

fers to two patterns of anesthesia administration

payable on a reasonable charge basis. Either the

anesthesiologist performs the procedure directly

without the assistance of an anesthetist or the

anesthesiologist medically directs anesthesia

during concurrent procedures. Medical direction

would occur in the context of concurrent proce-

dures not a single procedure. In the situation

where the anesthesiologist is involved in a single

anesthesia procedure involving a CRNA, we

would deem the procedure to be performed by the

anesthesiologist ... we would deem an anesthe-

sia procedure as personally performed by an an-

esthesiologist as long as the anesthesiologist was

continuously present with the CRNA for those

services that the anesthesiologist does not per-

sonally perform and the anesthesiologist is not

involved in any other anesthesia procedure.”

Subsequently in its administrative bulletins issued in

March 1988 to defendant anesthesiologists Blue Cross/Blue

Shield stated:

“We deem the anesthesia procedure as personally

performed by the anesthesiologist as long as the

anesthesiologist was continually present with the

App. 240

CRNA for those services that the anesthesiologist

does not personally perform and the anesthesiolo-

gist is not involved in any other anesthesia proce-

dure.”

Again, on August 10, 1990, Blue Cross/Blue Shield issued

another bulletin stating in pertinent part

“Personally furnished anesthesia services are

provided personally by the anesthesiologist to an

individual patient. You cannot bill for personally

furnished anesthesia if you are also simultane-

ously involved with the delivery of anesthesia

services for any other patient.”

Furthermore, in a memorandum to defendant, John

Murphy, on December 14, 1992, is written:

In order to qualify to receive reimbursement for

personal delivery (1/1) of a service, the anesthesi-

ologist must be continuously present with the

CRNA (if a CRNA is also involved) for those ser-

vices, the anesthesiologist does not personally per-

form, and the anesthesiologist cannot be involved

in any other anesthesia procedure.” (April 1988

Medicare Bulletin, Administrative Bulletin #177.)

Finally, as recently as January 7, 1994, Bernard Patash-

nick, Director of the Division of Medical Services Payment

Bureau of Policy Development wrote to the American

Society of Anesthesiologists stated the following:

“The anesthesiologist who is billing for personal

performance of the case must personally perform

the case. In theory, there is no one else to hand

the case to. In the medically directed case we do

not require the anesthesiologist to personally

perform all anesthesia activities. In fact, many of

these activities are performed by the CRNA.”

App. 241

Consequently, an MDA cannot bill one-to-one if the forego-

ing criteria are not met, even if the MDA participated in

some portion of the process. As recently as April 1996,

HCFA confirmed in a letter to the private carrier who

administers defendant MDAs’ claims that HCFA requires

the anesthesiologist to remain in the operating room in

billing for personally performed cases. In that same letter,

HCFA confirmed that medical direction of single proce-

dures does not exist. Defendants have been provided with

copies of this letter.

43. The defendant hospitals were on notice as early

as December 19, 1987, that the defendant anesthesiolo-

gists were billing fraudulently. Moreover, between 1990

and 1992, CRNAs at those hospitals reported the fraud.

For example, at Unity Mercy, copies of charts showing

that MDAs were fraudulent [sic] billing and were actually

in other operating rooms at the time were provided to in-

house counsel for Allina and to defendant Murphy, yet the

hospital did not report this fraud to any governmental

agency. At St. Cloud Hospital, Jerry Boldon, a CRNA,

wrote a memo disclosing the fraud to administrators.

However, instead of taking steps to stop the MDA’s fraud,

the hospitals fired Relator’s members who had brought the

fraud to their attention and knowingly facilitated the

continuation of the fraud.

44. Relator’s members have personal knowledge that

defendant anesthesiologists have routinely billed Medicare

for personal performance of anesthesia procedures in

which they were not continuously involved or present, as

required by Medicare. Those bills were for services for

which the defendant anesthesiologists knew they were not

entitled to reimbursement from Medicare, and were false

or fraudulent claims within the meaning of 31 U.S.C.

App. 242

3729. Defendant MAN used the services of defendants

Tank and HBAS who knowingly billed on their behalf for

services which they knew or should have known were not

performed by them.

45. The second basis for Medicare reimbursement of

a physician anesthesiologist is for medically directing a

CRNA or other anesthesia provider in two, three or four

concurrent anesthesia procedures. In order to be entitled

to such reimbursement, the anesthesiologist need not be

present in the operating room at all times. As previously

noted, however, he must comply with the following condi-

tions:

(1) For each patient, the physician must —

(i) Perform a preanesthetic examination and

evaluation;

(ii) | Prescribe the anesthesia plan;

(iii) Personally participate in the most demand-

ing procedures in the anesthesia plan,

including induction and emergence,

(iv) Ensure that any procedures in the anesthe-

sia plan that he or she does not perform are

performed by a qualified individual as de-

fined in program operating instructions;

(v) Monitor the course of anesthesia adminis-

tration at frequent intervals;

(vi) Remain physically present and available

for immediate diagnosis and treat of emer-

gencies; and

(vii) Provide indicated post-anesthesia care.

42 C.F.R. 405.552.

App. 243

46. Relator’s members have personal knowledge that

during the past six (6) years defendant anesthesiologists

have billed for medically directed services and personally

performed services without complying with the conditions

set forth in 42 C.F.R. § 405.552. Those bills were for

services for which the defendant anesthesiologists knew

they were not entitled to reimbursement from Medicare

and were false or fraudulent claims under Section 3729.

47. In particular, defendant Northwest Anesthesia

engaged in similar false billing practices and false claims

in connection with the provision of anesthesia services at

Abbott Northwestern Hospital. For example, anesthesiolo-

gists who work for NWA and provide services at Abbott

Northwestern have on numerous occasions billed for

personally performing operations when they were only

present in the operating room for a fraction of the actual

anesthesia time. Relator has supplied to the Government

affidavits from members of MANA who have been at

Abbott Northwestern which state that the anesthesiolo-

gists who provided anesthesia services at operations in

which those CRNAs were involved were “virtually never

present for the entire time.” Similar statements confirm

that anesthesiologists often left the operating room after

starting cases late in the day and never returned. Relator

has also obtained and supplied to the Government numer-

ous rejection documents reflecting operations or proce-

dures which were billed by the defendant Abbott

Northwestern anesthesiologists as “personally performed”

which Relator is informed and believe were false and

fraudulent. In order to facilitate this fraud, Allina and

Abbott Northwestern have announced plans to terminate

all of their CRNA employees. Relator and the Government

are informed and believe that this termination was not

ee a ee Ce et OD Hoenn ©

Vs ae cen detent stent, Labtn Maite sha, Sw mF

App. 244

because the CRNAs were not economically viable but

rather in order to force the CRNAs to be employed by the

defendant MDAs and thereby to simultaneously distance

the hospital from the defendant anesthesiologists’ fraudu-

lent billing practices.

48. Defendant anesthesiologists also contravened the

requirements of §405.552 as follows. Medicare does not

provide reimbursement to anesthesiologists in a group

practice for medical supervision of a procedure where one

member of the group substitutes for another during the

course of the procedure, except as follows:

If anesthesiologists are in a group practice, one

physician member may provide pre-anesthesia

examination and evaluation while another ful-

fills the other criteria. Similarly, one physician

member of the group may provide post-

anesthesia care while another member of the

group furnishes the other component parts of the

anesthesia service. However, the medical record

must indicate that the services were furnished by

physicians and identify the physicians who ren-

dered them.

CCH Medicare and Medicaid Guide, 3455.40, Medicaid

Carriers Manual, §15018 (C). Relator’s members have

personal knowledge that defendant anesthesiologists in

group practices billed Medicare for medical direction of

procedures during the course of which one group member

had taken over the procedure from another under circum-

stances which precluded reimbursement from Medicare.

Those bills were for services as to which the defendant

anesthesiologists knew they were not entitled to reimburse-

ment from Medicare, and were false or fraudulent claims

within the meaning of 31 U.S.C. §3729. The defendant

—————

App. 245

anesthesiologists have knowingly concealed such false

claims by failing to sign in and out of the operating room

during such procedures, thereby depriving Medicare of a

standard medical record which, if fully and accurately

prepared, would reveal defendants’ fraud. Defendant

hospitals have assisted them in this fraud by refusing to

require them to sign in and out of the operating room, and

in the case of defendants Unity and Mercy, by refusing to

require defendant anesthesiologists to carry “pagers” or |

“beepers.”

49. As CRNA’s who daily worked alongside the

defendant anesthesiologists at the defendant hospitals,

Relator members have personal knowledge of defendants’ |

false claims by virtue of communications with defendants

themselves, participation in the anesthesia procedures

which were later fraudulently billed by the defendant

anesthesiologists, and familiarity with hospital records

disclosing defendants’ fraud.

DEFENDANTS’ FRAUDULENT SCHEME

50. As previously alleged, since the 1983 TEFRA

regulations went into effect in November 1983, Medicare

has only recognized two ways for anesthesiologists to be

paid for anesthesia services: (1) personally performing a

procedure and (2) medically directing 2, 3, or 4 procedures.

HCFA has never recognized medical direction of one

procedure. As early as 1987, in a letter to one of the

Minnesota carriers to which defendants had access,

Charles Booth, Director of Policy and Reimbursement for

HCFA, stated in no uncertain terms that there is no such

thing as medical direction of a single procedure. Moreover,

in order to bill for personal performance of a procedure,

_————$— SS

App. 246

the anesthesiologist must either (1) personally perform

every aspect of the anesthesia procedure on the patient

and be present for the entire time, or (2) be continuously

present with the patient and a CRNA and continuously

involved with the case. These requirements make simple

common sense since when the anesthesiologist is involved

in a procedure with one CRNA, he is paid as if he per-

formed every aspect of the procedure by himself without

assistance and in most cases the CRNA receives nothing.

51. The requirement of continuous presence in the

operating room has been repeated by HCFA since 1987. It

is contained in Bulletins issued by Blue Cross/Blue Shield,

the carrier for the St. Cloud defendants; it is contained in

letters to the American Society of Anesthesiologists which

were republished in Newsletters available to defendants;

and it was enforced by government enforcement authori-

ties in Minnesota who investigated another hospital

owned by the Allina defendant for similar types of fraud.

52. As for medical direction of two, three and four

procedures, the rules are very strict if an anesthesiologist

seeks to be reimbursed. Of particular interest in this case,

the anesthesiologist must be Present in the operating room

with the patient and personally participate in all demand-

ing aspects of the anesthesia plan, even though he may be

absent from the operating room at other times to monitor

concurrent cases. In particular, the anesthesiologist must

be present at induction when the anesthetic is first intro-

duced into the patient at the beginning of the case and at

emergence when the surgery has been completed and the

patient is being revived from the anesthetic. Moreover, in

any event, the anesthesiologist must be present at the end

of the case because it is at that time that the anesthesiolo-

gist must make a determination as to whether or not the

App. 247

patient is in sufficiently stable condition to be turned over

to a non-anesthesia provider.

53. A second requirement which is required to be

satisfied to be reimbursed for medical direction of concur-

rent procedures is that the anesthesiologist must remain

present and immediately available for diagnosis and

emergencies. It goes without saying that the anesthesiolo-

gist cannot be involved in any other procedures other than

the concurrent procedures for which he is billing and must

bill the concurrencies correctly. For example, it is im-

proper for bill Medicare for medically directing two proce-

dures if, in fact, the anesthesiologist is involved in four

concurrent procedures.

54. Failure to satisfy any of the above requirements

_ disqualifies the anesthesiologist from reimbursement for

medical direction and submission of such a bill knowingly |

or with blind or reckless disregard for its truth constitutes

a false claim under the False Claims Act. The defendant

anesthesiologists enumerated in the caption to this Com-

plaint have routinely submitted bills to Medicare when

they did not satisfy the above requirements.

55. The defendant hospitals, including Abbott

Northwestern, St. Cloud, Unity and Mercy have actively

assisted the defendant anesthesiologists in submitting

those fraudulent bills, abetted their behavior, attempted to

conceal the fraud and chill reporting of the fraud by

relator members and, in addition, plaintiffs believe have

submitted false claims directly themselves which could

have resulted or did result in overpayments by Medicare.

56. The general fraudulent scheme carried out by

the defendant anesthesiologists practicing at the defen-

dant hospitals was to provide loose “supervision” of the

App. 248

CRNAs who were employed by defendant hospitals in a

manner which failed to satisfy either the requirements for

“medical direction” or for “personal performance”, yet to

bill Medicare as if they had in many cases “personally

performed” the procedure and in other cases, “medically

directed” the procedure. The direct consequences of this

was that CRNAg’ bills submitted on behalf of the CRNAs

who actually performed the procedures were not paid at

all or were dramatically reduced from the payments to

which they were entitled. ik

57. MANA has further corroborating evidence of

defendants’ false claims in the form of contemporaneous

records that were kept by MANA members. In particular,

MANA members Drew Mathews and Charles Hauwiller

kept a record and recorded on the patient’s anesthesia

record over a several year period when defendants left the

room and failed to appear for emergence. These records

have already been Provided to the defendants and are

incorporated herein by reference. Kristi Vogt, another

MANA member employed at North Memorial Hospital,

recorded the defendants’ presence or absence at emergence

on the anesthesia record. These records are in the posses-

sion of defendant Anesthesiology, P.A. and North Memo-

rial Hospital and are incorporated herein by reference.

With particularity, the types of fraud engaged in by the

anesthesiologists at each of the defendant hospitals was

the following.

FALSE CLAIMS ASSOCIATED WITH FAILURE

TO PARTICIPATE IN THE MOST DEMANDING

PROCEDURES OF THE ANESTHESIA PLAN |

ees RE ANESTHESIA PLAN

58. The defendant MDAs practicing at unity, Mercy

and North Memorial Hospitals failed to Participate in

App. 249

either emergence or the most demanding part of the

anesthesia plan in virtually every anesthesia procedure

performed there in violation of 42 C.F.R. 405.552. Instead,

defendants’ general practice at those hospitals was to

appear for induction at the time that the anesthesia was

being provided to the patient, to leave approximately 10

minutes later and to seldom, if ever, return at all. Instead,

the CRNA who was the only anesthesia provider left in the

operating room, would perform all of the procedures

necessary to maintain the patient in the appropriate state

of unconsciousness, to bring the patient out of the anes-

thesia, to extubate the patient when appropriate, and to

make the decision whether or not the patient was stable

enough to be transferred to a non-anesthesia provider

such as the post-anesthesia care unit. For those cases

billed as MAC (monitored anesthesia care), it was common

practice for MDAs at Mercy, Unity and North Memorial to

never enter the operating room at all, or only long enough

to sign the anesthesia record. While there was some very

small percentage of cases in which Unity, Mercy and

North Memorial defendants were present at emergence

and at extubation a minimum of 95% of the time they were

not present as required by Medicare in any Medicare case.

59. The Abbott Northwestern and St. Cloud defen-

dants were present more often at emergence. However,

approximately 5% of the time they failed to satisfy this

requirement and, nevertheless, improperly billed Medicare

for the procedure. Some representative examples of this

practice at each of the aforementioned defendant hospitals

are the following (Relators can identify the particular

patients involved in the vast majority of procedures

detailed in this Third Amended Complaint. However,

App. 250

these names have not been included to protect those

patient’s confidentiality):

Date of

Procedure

Associated

With False Defendant

Claim MDA Summary of Procedure

1. Location Defendant Unity and Mercy

12/29/93 Albay Billed for extensive repair of a

vagina. The procedure lasted 1

hour and 30 minutes. Con-

temporaneous records of Drew

Mathews demonstrate that

defendant Albay was only

present for approximately 20

minutes at the beginning of

the case and did not return for

emergence.

1/12/94 Heil Billed for medical direction of

an operation. Drew Mathews’

contemporaneous record shows

that Heil was present for only

20 minutes out of a 1 hour 40

minutes operation and was

not present at emergence.

2/2/94 Sperry Billed for medical direction of

a case that lasted 1 hour and

10 minutes in connection with

surgery to repair a superficial

wound. Drew Mathews’ con-

temporaneous record shows

that Defendant Sperry was

only present for 20 minutes

and was not present for

emergence.

3/2/94

3/16/94

3/21/94

App. 251

Magdsick Billed for an operation in OR-3

at Unity Hospital which began

Albay

Jones

at 7:25 and ended at 9:20. In

fact, during this procedure he

was attending a meeting with

the Critical Care Committee

which commenced at 8:00 a.m.

and was not available for the

emergence of the patient.

Billed for an operation last-

ing 1 hour and 10 minutes.

Drew Mathews’ contempor-

aneous record shows that

Defendant Albay was present

only for approximately 15

minutes at the beginning of

the case and was not present

at emergence.

Billed for Medically directing

three operations when, in

fact, he was involved in four

concurrent operations. Fur-

ther, Dr. Jones billed for an

operation in OR-7 for which

he was only present for 20

minutes out of a 3 hours and

35 minutes hysterectomy op-

eration. Drew Mathews’ con-

temporaneous record shows

that he was not present at

emergence.

App. 252

2. Location North Memorial

9/14/95 Everly Billed for personally perform-

ing a case when he was not

there at emergence.

11/15/93 Lader Billed for personally perform-

ing a case when he was not

there at emergence.

In addition, as previously stated, the North Memorial

defendants were absent at emergence approximately 95%

of the time in all cases, including Medicare cases. With

specificity, plaintiffs allege that in every case in which

Kristi Vogt was a CRNA, to the extent she did not note on

the medical records that defendant MDAs were present at

emergence, they were absent. The dates, times, locations

and other relevant information concerning these false

claims are within the possession of defendant Anesthesiol-

ogy, P.A. and North Memorial Hospital. Plaintiff has

requested this information but has not yet received it.

3. Location defendant Abbott Northwestern

enon cerendant Abbott Northwestern

Hospital

12/19/95 Meisner Failed to participate in

emergence in a case per-

formed in the main operating

room in the basement of

Abbott Northwestern Hospi-

tal. Her failure to do so was

based upon her involvement

in medically directing a case

in the minimally invasive

unit five floors above.

6/1/95 ; Engwall Was responsible for a case at

Abbott Northwestern Hospi-

tal. Charles Hauwiller was

App. 253

the CRNA on the case. Eng-

wall left for lunch and no

anesthesiologist relieved him

or came into the room after

he left. No anesthesiologist

was present at the end of the

case during emergence. Def-

endant Engwall was paged

several times during the case

but failed to appear at the

end of the case.

10/5/95 Engwall Was responsible for a case at

Abbott Northwestern Hospi-

tal. Charles Hauwiller was

the CRNA on the case.

Defendant Engwall was at

lunch throughout the case

and never entered the operat-

ing room from the beginning

until the end of the case.

3/1/95 Engwall Was responsible for an |

anesthesia case in the base-

ment while at the same time

taking responsibility for a |

concurrent case in the mini-

mally invasive center on the

fifth floor. Despite being

paged twice, defendant Eng-

wall did not return for emer-

gence or extubation. Defen-

dants McKlveen, Skoog, Nis-

sen and Musich were also

paged, however, no MDA ap-

peared for emergence of the

patient.

App. 254

Drew Mathews Records

In addition, Drew Mathews recorded on the anesthe-

sia records in scores of instances when MDAs at Unity

were not present at emergence. The dates and times of

these procedures are on records currently solely in defen-

dants’ possession.

4. Location defendant St. Cloud Hospital

———etdant St. Vioud Hospital

8/26/94 McMillan Started a case at 10:40 a.m.

and turned the case over to

defendant Rice at 11:56 a.m.

The first cased ended at

13:15. Rice started another

case at 13:12 and neither

McMillan nor Rice were pre-

sent for the emergence of the

patient at the end of the case

yet McMillan billed under

the AA modifier for person-

ally performing the case.

5/31/90 Gacusana Was performing an operation

at St. Cloud Hospital in OR-

l. He billed for personally

performing this procedure

even though he was also

involved in and responsible

for a procedure in OR-4

which commenced 1 minute

before the procedure in OR 1

and ended 40 minutes after

the procedure in OR-1. This

bill was fraudulent both on

the basis of Gacusana’s fail-

ure to be present and partici-

pate in the most demanding

procedures of the anesthesia

plan and also on the basis

App. 255

that he did not remain in the

room with the patient. Medi-

care rejected the CRNA’s bill

for the operation in OR-1 on

the basis that Defendant

Gacusana billed it as “per-

sonally performed.”

3/18/94 Johnson Billed Medicare for person-

ally performing a case where

he had become ill and leftthe

room shortly after induction

and never returned. In fact,

Defendant Johnson was at-

tached to an IV in the doc-

tors’ lounge while this pro-

cedure was occurring. Based

on the anesthesia _ record,

which was altered by defen-

dant Zwick, no anesthesiolo-

gist was responsible for the

case between 15:15 and 16:33.

2/4/92 Espelien _ Billed for a procedure in St.

Cloud Hospital under the AA

modifier which began at 10:51

and ended at 13:58. This

whole time defendant Espelien

billed for an anesthesia pro-

cedure which commenced at

12:25 in another operating

room and ended at 13:25. The

two procedures were concur-

rent. Moreover, because he was

not present in the room the

entire time and was, in fact,

involved in other procedures,

Defendant Espelien did not

qualify to bill the procedure

as personally performed.

a a i -

App. 256

FALSE CLAIMS ASSOCIATED WITH FAILURE

TO FULFILL REQUIREMENTS OF PERSONAL

PERFORMANCE

60. In addition, the defendant MDAs practicing at

St. Cloud, Unity, Mercy, North Memorial and Abbott

Northwestern Hospitals were never present in the operat-

ing room with the patient and the CRNAs in 1:1 cases for

the entire anesthesia time as required by Medicare for any

Medicare procedure between January 1988 and June 14,

1996. While their reasons for these absences from the

operating room varied including, among others: (1) provid-

ing servcies on a time billed basis to other patients; (2)

providing services on a fixed fee basis to other patients; (3)

sleeping; (4) reading or attending to personal business on

the phone; (5) attending meetings or performing duties on

other floors; (6) being attached to an IV and receiving

fluids in the doctors’ lounge; (7) watching Star Trek; (8)

watching Vikings football games; (9) leaving the hospital;

or (10) engaging in other activities. Their failure to be

present with the CRNA and patient for the entire anesthe-

sia service time in these procedures disqualified them

from billing for personally performing anesthesia proce-

dures to Medicare. In May 1994 MAPA defendants even

discussed adopting a policy whereby they would start

cases at one hospital and leave to do cases at the other

hospital.

61. In violation of the False Claims Act, the afore-

mentioned defendants nevertheless filed at least 40,000

bills to Medicare under the “AA” modifier claiming that

they personally performed procedures between January

1988 and the date of this Third Amended Complaint. The

specific dates and time of these procedures is set forth in

computer printouts in MANA’s possession, as well as in

App. 257

records maintained by the defendants and by MetraHealth

Ins. Co. A summary of many of the bills submitted by each

of the defendant anesthesiologists is annexed hereto as

Exhibit “A” and incorporated herein by reference. Since

the printouts of the individual procedures and billing

information in question cover over 250,000 separate bills

and instances, they are not annexed to this Third Amended

Complaint. However, they are incorporated herein by

reference and are available in plaintiffs’ counsel’s office for

review by defendants should they desire to do so. Addi-

tional billing information is in the possession of defen-

dants’ Medicare carrier. Representative examples of what

plaintiffs believe to be fraudulent claims by these defen-

dants based upon their failure to be present with the

patient in the operating room for the entire anesthesia

time are as follows:

Date of

Procedure

Associated

With False Defendant

Claim MDA Summary of Procedure

Location Defendant Mercy Hospital

6/9/92 Janossy Defendant Janossy billed

Medicare for personally per-

forming a heart case from 8:30

to 23:55. He billed for a second

Medicare case, which started

at 7:35 and ended at 8:50, as

though there were two concur-

rent cases.

During the span of the first

case he billed nine other cases

on non-Medicare patients: (1)

9:04 to 9:20; (2) 9:10 to 10:55;

11/2/89

8/21/90

App. 258

Baggenstoss:

Suh

(3) 9:33 to 11:15; (4) 11:15 to

11:45; (5) 12:45 to 13:35; (6)

12:30 to 17:35; (7) 17:35 to

18:35; (8) 7:48 to 8:45; and (9)

8:45 to 9:00.

At 8:45, he was involved in

four concurrent cases. There-

fore both the first and the

second Medicare cases were

fraudulently billed.

He billed for personally

performing an operation in

OR-4 which began at 11:20

and ended at 12:20.

However, at the same time, he

was also performing a proce-

dure in OR-7 which began at

10:57 and ended at 11:55.

Under the rules, these were

concurrent procedures and it

was fraudulent to bill either

one of them as personally

performed.

He billed for personally per-

forming an operation in OR-2

between 18:50 and 21:20 when

the records indicate he was

also performing an anesthesia

procedure in OR-5 between

20:45 and 23:40.

These were concurrent pro-

cedures and it was fraudu-

lent to bill them as per-

sonally performed.

EN ee

App. 259

7/2/90 Sperry He billed for performing an

operation in OR-2 which last-

ed 1 hour and 45 minutes

and began at 7:25 and ended

at 8:50.

However, at the same time,

in OR-4, he was involved

in an anesthesia procedure

which began at 8:05 and

ended at 8:20.

These procedures are clearly

concurrent procedures and

billing one or both of them as

personally performed was

fraudulent.

9/20/89 Baggenstoss He billed for an operation in

OR-3 as_ personally _per-

formed. The operation lasted

over 7 hours beginning at

19:15 and ending at 2:30.

At the same time, he was

performing anesthesia pro-

cedures in OR-2 beginning at

18:05 and ending at 19:35

and OR-2 beginning at 20:25

and ending at 21:50.

Both of these operations

overlap the personally per-

formed operation and, there-

fore, they should have been

billed as concurrent medi-

cally directed operations.

Billing one or more of them

as personally performed was

fraudulent.

eet

App. 260

11/15/89 Baggenstoss He billed for personally

performing an operation which

lasted 7.5 hours between 10:30

and 18:15.

At the same time, he billed

| for performing an anesthesia

procedure and operating in

OR-2 which began at 16:55

and ended at 18:10.

These two operations clearly

overlapped under the Medi-

care regulations and billing

one or more of chem as

personally performed is clear

fraud.

10/11/89 Jernigan He billed for personally

performing an operation in

OR-9. The procedure lasted

two hours. It began at 12:30

and ended at 14:25.

At the same time, he was

billing for an anesthesia pro-

cedure in OR-2 which began

at 11:50 and ended at 14:30.

These two operations clearly

overlapped and billing one or

more of them as personally

performed was clearly fraud-

ulent.

3/7/94 Magdsick He billed for personally

performing an operation in

OR-10. The operation lasted

11 hours and 25 minutes and

began at 6:35 and ended at

18:00.

App. 261

During that same time

period, Defendant Magdsick

billed for an anesthesia pro-

cedure in OR-6 which began

at 11:15 and ended at 12:40

and an anesthesia procedure

in OR-8 which began at 11:48

and ended at 12:35.

The first bill is clearly

fraudulent since all of these

operations were concurrent.

The other two bills may also

be fraudulent, however, they

have not been provided to us.

3/10/94 Suh Defendant Suh was perform-

ing a catscan and an X-ray

between 12:45 and 15:30 and

billed for same.

At the same time he billed for

performing anesthesia pro-

cedures in another part of the

hospital in OR-3, the first

procedure beginning at 12:50

and ending at 13:02 and the

second procedure beginning

at 13:20 and ending at 15:00.

Both these procedures were

ongoing while Defendant Suh

was apparently in another

part of the hospital perform- |

ing a catscan. Clearly he was :

not present and available to

attend to any emergencies

that might arise regardless of

how he may have billed those

procedures.

App. 262

Location Defendant Unity Hospital

2/7/92 Castillejos

10/7/92 Hong

1/24/92 Heil

3/28/92 Magdsick

11/25/92 Albay

2/15/93 Albay

7/19/93 Polta

Billed for personally perform-

ing a case from 11:00 to 12:05

while at the same time doing

another case from 10:20 to

11:20.

Billed for personally perform-

ing a case from 12:25 to 16:00

while at the same time bill-

ing for a procedure from

12:15 to 13:05 and from 14:25

to 15:25.

Billed for personally perform-

ing a case from 15:20 to 17:25

while at the same time bill-

ing for a procedure from

13:30 to 15:50.

Billed for personally perform-

ing a case from 8:15 to 16:20

while at the same time bill-

ing for a procedure from

12:20 to 13:35.

Billed for personally perform-

ing a case from 10:25 to 14:45

while at the same time bill-

ing for a procedure from

13:30 to 15:15.

Billed for personally perform-

ing a case from 7:38_to 8:30

while at the same time bill-

ing for a procedure from 7:30

to 7:45 and from 7:50 to 8:05.

Billed for personally perform-

ing a case from 9:20 to 19:20

App. 263

while at the same time bill-

ing for a procedure from 7:30

to 11:15 and another case

from 11:55 to 12:55.

Location Defendant St. Cloud Hospital

5/31/90 Gacusana Gacusana billed for person-

ally performing in this op-

ration in OR-1. It began at

12:35 and ended at 13:03.

At the same time, Defendant

Gacusana was billing for an

operation in OR-4 which

began at 12:34 and ended at

13:43.

The CRNA’s bill for the prior

operation was rejected by

Medicare. Accordingly, Def-

endant Gacusana’s bill was

clearly fraudulent.

2/4/92 Espelien He billed for personally per-

orming an operation which

began at 10:51 and ended at

13:58. Because of this the bill

for the CRNA who actually

performed the _ operation,

Mary Stotko, was rejected by

Medicare.

In fact, Defendant Espelien

was also billing for an anes-

thesia procedure in another

operating room which com-

menced at 12:25 and ended at ~

13:28. -

Therefore, his bill for the first

operation was fraudulent. The

Seams memos =

App. 264

CRNA in question had to

take this matter all the way

-to a Judge before she was

able to obtain a reversal and

be paid the modest amount

she was owed for actually

performing the case.

8/8/91 Gacusana He billed for an operation in

OR-5 which began at 20:40

and ended at 2:12. He billed

for personally performing this

operation and as a result the

CRNA’s bill was rejected by

Medicare.

During the same time Defen-

dant Gacusana was also bill-

ing for an anesthesia pro-

cedure that began at 21:40

and ended at 23:00 and an

operation that began at 23:11

and ended at 00:17. Thus the

bill for personal performance

was fraudulent and as a result

the bill for the CRNA who

performed the work was re-

ected by Medicare.

3/29/90 Johnson Billed for personally perform-

ing a case in OR-8 which be-

gan at 7:20 and ended at

10:35.

At the same time he was also

billing for an anesthesia pro-

cedure in OR-10 which began

at 7:43 and ended at 10:04.

App. 265

These operations clearly over-

lapped and Defendant John-

son’s bill was clearly fraud-

ulent. As a result the bill

from the CRNA who per-

formed the case was rejected

by Medicare.

2/6/90 Johnson Billed for personally perform-

ing an operation in OR-1

which commenced at 12:05

and ended at 14:55.

At the same time he was

billing for an anesthesia pro-

cedure in OR-4 which com-

menced at 13:45 and ended

at 15:50. There is a discrep-

ancy in the times on the

chart and the times on the

Anesthesia Daily Log.

In any event, these opera-

tions clearly overlapped. Def-

endant Johnson fraudulently

billed the first operation as

personally performed and as a

result the bill from the CRNA

who actually performed the

work was rejected by Medi-

care.

3/5/90 Rice He billed for personally

performing a case in OR-1

which began at 14:25 and

ended at 15:50. This, by the

way, is the same patient that

Defendant Johnson had pre-

viously fraudulently billed.

;

App. 266

At the same time Defendant

Rice was billing for anesthe-

sia in OR-2 which began at

12:20 and ended at 15:10.

Again there is a discrepancy

between the actual times no

the anesthesia record and the

times on the computerized

Daily Log.

In any event the two opera-

tions clearly overlap. Defen-

dant Rice fraudulently billed

the first operation as person-

ally performed and as a result,

the bill for the CRNA who

actually performed the opera-

tion was rejected by Medicare.

1/12/90 Gacusana He billed for an operation in

OR-5 which commenced at-

19:15 and ended at 22:00.

At the same time he was

billing for an anesthesia pro-

cedure in OR-3 which com-

menced at 20:40 and ended

at 22:15.

Gacusana fraudulently billed

for personally performing the

first operation although he

was concurrently medically

directing another operation..,

As a result, the bill from the

CRNA who actually per-

formed the anesthesia pro-

cedure was rejected by Medi-

care.

App. 267

11/30/89 Halvorson He was performing an anes-

thesia procedure in OR-6

which commenced at 7:45 and

ended at 11:15 and billed for

personally performing same.

At the same time he was

billing for an anesthesia pro-

cedure in OR-7 which com-

menced at 7:30 and ended at

9:50.

As a result of Defendant

Halvorson’s fraudulent bill for

the first operation, the bill for

the CRNA who actually per-

formed the procedure was

denied by Medicare.

10/31/89 Johnson Johnson billed for an anesthe-

sia procedure in OR-1 which

began at 7:30 and ended at

9:20. He billed for personally

performing this procedure

although at the same time he

was billing for a procedure in

OR-7 which began at 6:55 and

ended at 8:25. This case was

followed by another case in

OR-7 which started 8:45 and

ended at 10:55.

Both cases in OR-7 were

concurrent with the proce-

dure in OR-1. Accordingly,

Defendant Johnson’s bill for

the first operation was fraud-

ulent. As a result of his :

fraudulent bill, the bill from

App. 268

the CRNA who actually per-

formed the procedure was

rejected by Medicare.

11/8/89 Boyle Boyle billed for personally

performing an operation that

began at 9:55 and ended at

11:05.

At the same time he was also

billing for a concurrent op-

eration which began at 7:50

and ended at 10:45. The bill

for the first operation was

fraudulent and as a result

the bill from the CRNA who

actually performed the pro-

cedure was rejected by Medi-

care.

8/25/89 Evenson Evenson billed for an opera-

tion in OR-7 which began at

14:25 and ended at 16:55.

At the same time he was

billing for an operation in

OR-CR which began at 16:45

and ended at 18:10. Defen-

dant Evenson’s bill for the

first operation was fraudu-

lent. As a result the bill from

the CRNA who actually per-

formed the procedure was

rejected by Medicare.

7/24/89 Espeland He billed for an anesthesia

procedure in OR-8 which

began at 15:20 and ended at

20:50.

App. 269

At the same time he was

billing for an anesthesia pro-

cedure in OR-3 which began at

18:25 and ended at 18:55. The

bill for the first procedure was

fraudulent and as a result the

bill from the CRNA who actu-

ally performed the procedure

was denied by Medicare.

11/4/93 Zwick Zwick started at case at 11:04

in OR-11, and turned this case

over to Defendant Boyle at

12:36. She was also doing

another case from 9:25 - 11:20,

yet she billed the case in OR-

11 as personally performed.

7/2/94 Rice Billed Medicare for personally

performing, yet was not con-

tinuously involved and the

CRNA noted “Doctor Rice

notified” when cardiac changes

occurred.

5/13/94 Boyle Boyle billed Medicare for per-

sonally performing a case in

OR-5 from 18:16 to 19:20.

Prior to starting this case, he

relieved Defendant Johnson

on a different case at 17:41

and finished that case at

18:23.

5/30/94 McMillan McMillan billed Medicare for

personally performing a case

in OR-5 from 22:55 to 0:49.

From 23:15 until 00:01, he

was involved in a C-section in

delivery room 1 on a different

floor.

App. 270

11/11/93 Boeke Boeke billed Medicare for

personally performing a case

from 20:45 to 21:45 in OR-5.

He did a different case in OR-

18 from 21:45 to 23:06.

8/26/94 McMillan McMillan billed Medicare for

and Rice personally performing a case

in OR-6 that started at 10:40.

The case was turned over to

Defendant Rice at 11:56. The

CRNA time shows the case

ended at 13:15, but apparently

Defendant Rice was not

present for emergence, since

there is no MDA stop time

charted. This seems likely

since Defendant Rice started

another case in OR-2 at 13:12

and finished it at 15:54. At

any rate there were two con-

current cases going on at the

Same time and he was not

allowed to bill for personally

performing the case in OR-6.

12/28/94 Lang Lang billed for personally per-

forming a case in OR-1 from

7:28 to 10:30. He was doing

another case in OR-4 from

8:13 to 10:09. The first case

was therefore fraudulent. The

record was altered to show

that Defendant Reitz did the

first case.

Location Defendant Abbott IN orthwestern Hospital

12/16/89 Beverlin Drew Mathews record shows

and ‘this case lasted 2 hours and

1/18/95

6/16/93

12/3/92

11/28/95

App. 271

Dwarkanath

Boening

Burke

Gayes and

Burke

Gayes

20 minutes. Beverlin started

the case but was later relieved

by Dwarkanath. In total, the

two of them were present in

the room for 25 minutes. The

case was billed as AA.

Drew Mathews record shows

this case lasted one hour. Boe-

ning was present for 20 min-

utes.

Drew Mathews record shows

this case lasted one hour, but

Burke was only present for

30 minutes, yet billed for per-

sonally performing the case.

Drew Mathews record shows

this case lasted 3 hours and

10 minutes. Gayes started the

case and was later relieved by

Burke. Together the two of

them were present for 25

minutes yet billed for per-

sonally performing the case.

Drew Mathews records shows

this case lasted 3 hours and 5

minutes, but Defendant Gayes

never entered the operating

suite but rather peered

through the window of the

adjacent ante-room occasion-

ally during the case. He billed

for personally performing the

case. Clearly this was a non-

medically directed CRNA case,

and as such should have been

billed using the QZ modifier.

1/12/93

8/13/93

9/1/93

App. 272

Gudman

Lillehei

McKlveen

and Gudman

Instead the hospital rou-

tinely billed using the QX

modifier (medically directed

CRNA services) confirming

the MDA fraudulent bill, even

though this meant Medicare

paid nothing or less than they

should have for the CRNA

services.

Drew Mathews record shows

this case lasted 2 hours and

35 minutes, but Defendant

Gudman was present for only

35 minutes, yet he billed

for personally performing the

case.

Drew Mathews record shows

this case lasted one hour and

18 minutes but Defendant

Lillehei was present for only

25 minutes, yet he billed

for personally performing the

case.

McKlveen started this case

and was later relieved by

Defendant Gudman. Drew

Mathews record shows this

case listed 8 hours, but Def-

endant McKlveen and Defen-

dant Gudman were present

for only one hour and 45

minutes, yet they billed for

personally performing the

case.

iittala

App. 273

12/3/92 Menzel and Menzel started this case and

Meisner was later relieved by Defen-

dant Meisner. Drew Mathews

record shows this case lasted

3 hours and 30 minutes, but

Defendant Menzel and Def-

endant Meisner were present

for only 25 minutes, yet they

billed for personally perform-

ing the case.

3/26/94 Musich and Miusich started this case and

Lillehei was later relieved by Defen-

dant Lillehei. Drew Mathews

record shows this case lasted

2 hours and 10 minutes, but

Defendant Musich and Def-

endant Lillehei were present

for only 30 minutes, yet they

billed for personally perform-

ing the case.

7/21/93 Plut Drew Mathews record shows

this case lasted 2 hours and

45 minutes but Defendant

Plut was present for only 1

hour and 30 minutes, yet he

billed for personally perform-

ing the case.

3/23/90 R. Johnson Drew Mathews record shows

this case lasted 2 hours, but

Defendant Richard Johnson

was present for only 50 min-

utes, yet he billed for person-

ally performing the case.

10/3/94 Shaw, Shaw started this case and

Boening, was later relieved by Defen-

Beverlin dant Boening, who was in

App. 274

turn relieved by Defendant

Beverlin. Drew Mathews re-

cord shows this case lasted 2

hours and 15 minutes. Defen-

dant Shaw was present for 16

minutes. Defendant Boening

was present for 2 minutes.

Defendant Beverlin was pre-

sent for 7 minutes. They billed

for personally performing the

case.

5/23/95 Stauffer Drew Mathews record shows

this case lasted 2 hours and 40

minutes, but Defendant

Stauffer was present for only

40 minutes, yet he billed

for personally performing the

case.

12/25/93 Wintermute Drew Mathews record shows

this case lasted 2 hours and

30 minutes, but Defendant

Wintermute was present for

only 1 hour and 5 minutes, yet

he billed for personally per-

forming the case.

Location North Memorial Hospital

3/31/91 Lader Billed for personally perform-

ing procedure when he was

absent from the room for a

substantial period of time.

5/7/91 Walker Billed for personally perform-

ing case when he was not in

the room for the entire time.

4/25/91 Atmore Billed for personally perform-

ing a case when he was not in

App. 275

the room for a substantial

period of the time.

5/30/91 Lader Billed for personally perform-

ing a case when he was ab-

sent from the room for a sub-

stantial period of time.

4/26/91 Everly Billed for personally perform-

ing a case when he was ab-

sent from the room for a

substantial period of the time.

5/9/91 Peterman Billed for personally perform-

ing a case when he was ab-

sent from the room for a

substantial period of the time.

9/27/94 Walker Billed for personally perform-

ing a case when he was ab-

sent from the room for a

substantial period of the time.

10/3/94 Peterman Billed for personally perform-

ing a case when he was ab-

sent from the room for a sub-

stantial period of the time.

In addition, plaintiffs have in their possession print-

outs detailing the defendant, date, procedure, amount paid

and other relevant information demonstrating that defen-

dant Anesthesia P.A. during the relevant period submitted

approximately 7,000 bills under the AA modifier. Plaintiffs

intend to prove that in all of these cases, the Anesthesia,

P.A. MDAs were absent from the room disqualifying them

for reimbursement under Medicare. See Exhibit “A”

hereto.

App. 276

62. Defendent anesthesiologists were not merely

momentarily absent from the operating room during the

anesthesia procedures described above. Rather, during the

relevant time period January 1988 to at least June 1996, it

was routine for each of the defendant anesthesiologists to

leave the operating room for substantial portions of the

time that the procedure was taking place even though they

intended to bill and did bill Medicare for personally

performing the procedure occurring in the operating room.

While the anesthesiologist was absent, it was the CRNA

members of plaintiff MANA who actually provided the

anestheria services to the patient.

FALSE CLAIMS BASED UPON

_ WRONG CONCURRENCY

63. The plaintiffs have also billed a substantial

number of procedures with the wrong concurrency thereby

inducing overpayments from Medicare. Some representa-

tive examples are the following:

Location Defendant Northwest Anesthesia

6/21/93 _ Beverlin Billed for personally performing a

procedure from 9:40 to 14:30 while

concurrently involved in a proce-

dure in another case from 7:15 to

10:05.

7/21/93 — Beverlin Billed for personally performing a

procedure from 8:30 to 13:05 while

concurrently involved in a proce-

dure in another case from 7:15 to

8:55. Z

9/8/93

11/9/93

11/25/93

12/23/93

7/25/94

10/3/94

4/12/95

Beverlin

App. 277

Billed for personally performing a

procedure from 9:15 to 11:05 while

concurrently involved in a proce-

dure in another case from 7:30 to

11:00

Billed for personally performing a

procedure from 14:30 to 19:40

while concurrently involved in a

procedure in another case from

12:25 to 14:40.

Billed for personally performing a

procedure from 10:20 to 18:02

while concurrently involved in a

procedure in another case from

9:20 to 11:10.

Billed for personally performing a

procedure from 8:30 to 11:40 while

concurrently involved in a proce-

dure in another case from 7:30 to

8:30.

Billed for personally performing a

procedure from 9:55 to 16:40 while

concurrently involved in a proce-

dure in another case from 8:20 to

10:40.

Billed for personally performing a

procedure from 12:40 to 15:40

while concurrently involved in a

procedure in another case from

11:30 to 13:30.

Billed for personally performing a

procedure from 9:25 to 13:00 while

concurrently- involved in a proce-

dure in another case from 7:40 to

14:40.

5/18/95 _—Beverlin

6/1/95 Beverlin

12/15/95 Beverlin

8/8/93 Blomberg

11/11/93 Blomberg

2/10/94 Blomberg

11/18/94 Blomberg

App. 278

Billed for personally performing a

procedure from 13:00 to 17:00

while concurrently involved in a

procedure in another case from

11:25 to 14:15.

Billed for personally performing a

procedure from 9:10 to 12:10 while

concurrently involved in a proce-

dure in another case from 8:00 to

10:30.

Billed for personally performing a

procedure from 15:20 to 18:10

while concurrently involved in a

procedure in another case from

14:20 to 16:05.

Billed for personally performing a

procedure from 10:35 to 13:50

while concurrently involved in a

procedure in another case from

10:20 to 12:30.

Billed for personally performing a

procedure from 14:40 to 19:00

while concurrently involved in a

procedure in another case from

13:00 to 14:40.

Billed for personally performing a

procedure from 16:05 to 20:30

while concurrently involved in a

procedure in another case from

13:10 to 16:20.

Billed for personally performing a

procedure from 15:07 to 19:50

1/24/95

2/8/95

4/20/95

6/9/95

10/3/95

6/24/93

Blomberg

Boening

App. 279

while concurrently involved in a

procedure in another case from

14:00 to 15:35.

Billed for personally performing a

procedure from 11:03 to 14:10

while concurrently involved in a

procedure in another case from

7:35 to 11:30.

Billed for personally performing a

procedure from 8:40 to 9:10 while

concurrently involved in a proce-

dure in another case from 7:30 to

9:05.

Billed for personally performing a

procedure from 10:30 to 14:00

while concurrently involved in a

procedure in another case from

8:05 to 10:30.

Billed for personally performing a

procedure from 11:20 to 16:10

while concurrently involved in a

procedure in another case from

7:40 to 13:15.

Billed for personally performing a

procedure from 8:50 to 15:25 while

concurrently involved in a proce-

dure in another case from 7:35 to

8:50.

Billed for personally performing a

procedure from 10:25 to 13:30

while concurrently involved in a

procedure in another case from

10:00 to 11:45.

8/18/93

11/17/93

4/6/94

7/23/94

8/21/94

10/11/94

1/21/96

Boening

App. 280

Billed for personally performing a

procedure from 9:35 to 14:35 while

concurrently involved in a proce-

dure in another case from 7:30 to

9:50.

Billed for personally performing a

procedure from 8:10 to 11:20 while

concurrently involved in a proce-

dure in another case from 7:25 to

10:15.

Billed for personally performing a

procedure from 8:30 to 9:50 while

concurrently involved in a proce-

dure in another case from 7:15 to

9:00.

Billed for personally performing a

procedure from 12:10 to 13:05 while

concurrently involved in a proce-

dure in another case from 7:50 to

12:10.

Billed for personally performing a

procedure from 17:45 to 19:45 while

concurrently involved in a proce-

dure in another case from 16:45 to

17:35.

Billed for personally performing a

procedure from 11:55 to 13:15 while

concurrently involved in a proce-

dure in another case from 10:50 to

12:22.

Billed for personally performing a

procedure from 21:40 to 0:55 while

6/16/93

6/17/93

1/3/94

10/17/94

10/26/94

10/31/94

Burke

App. 281

concurrently involved in a proce-

dure in another case from 20:50 to

22:45.

Billed for personally performing a

procedure from 11:35 to 18:50 while

concurrently involved in a proce-

dure in another case from 10:35 to

12:10.

Billed for personally performing a

procedure from 10:50 to 12:55 while

concurrently involved in a proce-

dure in another case from 10:35 to

12:55.

Billed for personally performing a

procedure from 9:05 to 12:10 while

concurrently involved in a proce-

dure in another case from 7:15 to

9:10.

Billed for personally performing a

procedure from 9:35 to 12:55 while

concurrently involved in a proce-

dure in another case from 7:30 to

9:35.

Billed for performing a procedure

from 9:10 to 10:35 while concur-

rently involved in a procedure in

another case from 7:35 to 11:30.

Billed for performing a procedure

from 9:55 to 11:35 while concur-

rently involved in a procedure in

another case from 7:30 to 9:55.

11/17/94 Burke

2/20/95 Burke

9/27/95 Burke

7/30/93 Blomberg

10/28/94 Blomberg

7/4/93 Boening

7/21/93 ~+Boening

8/9/94 Dwaraka-

nath

App. 282

Billed for performing a procedure

from 20:50 to 22:30 while concur-

rently involved in a procedure in

another case from 18:45 to 20:50.

Billed for performing a procedure

from 9:12 to 13:20 while concur-

rently involved in a procedure in

another case from 7:45 to 9:45.

Billed for performing a procedure

from 9:50 to 13:12 while concur-

rently involved in a procedure in

another case form 7:40 to 10:45.

Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

Billed for personally performing a

case from 15:00 to 16:15 when he

was involved in a concurrent case

from 12:15 to 15:00.

Billed for personally performing a

procedure when she was involved

in two concurrent procedures.

Billed for performing two concur-

rent procedures when she was in-

volved in three concurrent

procedures.

Billed for performing a procedure

from 9:00 to 13:30 while concur-

rently involved in a procedure in

another case from 7:40 to 9:55.

9/8/94

6/16/93

7/19/93

7/23/93

8/25/93

9/2/93

9/7/93

9/2/93

Dwaraka-

nath

Engwall

Gayes

Giron

Groves

Gudman

Johnson

App. 283

Billed for performing a procedure

from 10:20 to 12:40 while concur-

rently involved in a procedure in

another case from 7:45 to 14:20.

Billed for performing a procedure

from 13:15 to 15:00 while concur-

rently involved in a procedure in

another case from 13:10 to 13:40.

Billed for performing a procedure

from 11:45 to 16:45 while concur-

rently involved in a procedure in

another case from 7:10 to 12:00.

Billed for performing a procedure

from 14:20 to 16:25 while concur-

rently involved in a procedure in

another case from 13:25 to 14:45.

Billed for performing a procedure

from 16:20 to 19:00 while concur-

rently involved in a procedure in

another case from 16:10 to 17:30.

Billed for performing a procedure

from 11:45 to 14:35 while concur-

rently involved in a procedure in

another case from 10:40 to 11:50.

Billed for performing a procedure

from 9:15 to 11:10 while concur-

rently involved in a procedure in

another case from 9:00 to 11:05.

Billed for performing a procedure

from 13:55 to 17:45 while concur-

rently involved in a procedure in

another case from 7:00 to 15:30.

10/22/93 Johnson

12/8/93 _— Lilllehei

8/5/93 McKlveen

9/15/93. Meisner

4/29/94 Meisner

6/4/93 Menzel

10/19/93 Musich

10/22/93 Musich

App. 284

Billed for performing a procedure

from 14:15 and 19:45 while con-

currently involved in a procedure

in another case from 13:35 to 15:10.

Billed for performing a procedure

from 17:55 to 20:40 while concur-

rently involved in a procedure in

another case from 16:25 to 18:20.

Billed for performing a procedure

from 17:45 to 19:45 while concur-

rently involved in a procedure in

another case from 17:00 to 18:15.

Billed for performing a procedure

from 12:15 to 14:00 while concur-

rently involved in a procedure in

another case from 11:20 to 12:32.

Billed for performing a procedure

from 8:15 to 10:15 while concur-

rently involved in a procedure in

another case from 8:00 to 9:15.

Billed for performing a procedure

from 9:50 to 13:30 while concur-

rently involved in a procedure in

another case from 7:25 to 10:50.

Billed for performing a procedure

from 11:45 to 14:45 while concur-

rently involved in a procedure in

another case from 11:00 to 11:55.

Billed for performing a procedure

from 23:00 to 3:30 while concur-

rently involved in a procedure in

another case from 22:30 to 23:55.

8/26/93

12/22/93

7/12/93

8/12/93

9/9/93

10/20/93

8/23/93

9/2/93

Nissen

Pereira

Plut

App. 285

Billed for performing a procedure

from 12:30 to 16:40 while concur-

rently involved in a procedure in

another case from 12:15 to 14:40.

Billed for performing a procedure

from 15:10 to 17:00 while concur-

rently involved in a procedure in

another case from 14:50 to 16:10.

Billed for performing a procedure

from 12:00 to 17:30 while concur-

rently involved in a procedure in

another case from 7:35 to 12:25.

Billed for performing a procedure

from 9:45 to 14:45 while concur-

rently involved in a procedure in

another case from 8:40 to 12:05.

Billed for performing a procedure

from 11:35 to 14:05 while concur-

rently involved in a procedure in

another case from 10:10 to 16:30.

Billed for performing a procedure

from 20:10 to 21:55 while concur-

rently involved in a procedure in

another case from 18:05 to 20:40.

Billed for performing a procedure

from 12:25 to 14:55 while concur-

rently involved in a procedure in

another case from 12:25 TO 13:25.

Billed for performing a procedure

from 9:55 to 13:35 while concur-

rently involved in a procedure in

another case from 9:15 to 11:20.

6/25/93

11/4/93

10/4/93

10/28/93

7/21/93

11/5/93

3/2/94

8/6/93

Shaw

Skoog

Stauffer

Tiu

Tronnier

App. 286

Billed for performing a procedure

from 8:00 to 8:35 while concur-

rently involved in a procedure in

another case from 7:25 to 9:45.

Billed for performing a procedure

from 10:40 to 13:50 while concur-

rently involved in a procedure in

another case from 9:40 to 11:15.

Billed for performing a procedure

from 18:20 to 23:05 while concur-

rently involved in a procedure in

another case from 17:45 to 19:25.

Billed for performing procedure

from 10:00 to 16:45 while concur-

rently involved in a procedure in

another case from 8:45 to 12:15.

Billed for performing a procedure

from 11:00 to 12:15 while concur-

rently involved in a procedure in

another case from 9:45 to 11:05.

Billed for performing a procedure

from 9:45 to 14:15 while concur-

rently involved in a procedure in

another case from 7:20 to 10:15.

Billed for performing a procedure

from 10:25 to 14:20 while concur-

rently involved in a procedure in

another case from 9:45 to 11:00.

Billed for performing a procedure

from 17:00 to 21:45 while concur-

rently involved in a procedure in

another case from 13:15 to 19:00.

App. 287

6/22/93 Wintermute Billed for performing a procedure

from 11:10 to 15:00 while concur-

rently involved in a procedure in

another case from 7:00 to 13:20.

3/21/94 Wintermute Billed for performing a procedure

from 11:30 to 14:20 while concur-

rently involved in a procedure in

another case from 7:15 to 11:40.

Location Defendant Mercy Hospital

3/6/92 Polta Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

3/12/92 Polta Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

3/12/92 Polta Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

3/25/92 ~Polta Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

3/25/92 ~=Polta Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

3/26/92 Polta Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

- cedures.

App. 288

3/11/92 Magdsick Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

3/18/92 Magdsick Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

3/25/92 Magdsick Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

3/17/92 Kloepper _ Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent

procedures.

1/14/92 Yue Started a Medicare case at 10:50

and finished it at 11:50. The case

was billed as though there were

two concurrent cases, but he was

involved in other cases from 11:30

to 12:30 and from 10:55 to 11:30.

3/18/92 Yue Started a Medicare case at 9:05

and finished it at 10:20. The case

was billed as though there were

two concurrent cases but he was

involved in other cases from 8:30

to 9:25, and from 8:40 to 11:30.

3/18/92 Yue Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

ae Pee AST Ne ee eee ee TE ee

3/23/92

3/25/92

3/31/92

1/28/92

3/6/92

3/30/92

Yue

Albay

Janossy

Roseberg

Polta

Cumming

iit

App. 289

Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

Billed for performing two concur-

rent procedures when she was in-

volved in three concurrent pro-

cedures.

Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

Started a Medicare case at 12:07

and finished it at 13:10. The case

_ was billed as though there were

two concurrent cases, but he was

involved in other cases from 11:45

to 14:15 and from 12:20 to 14:10.

Started a Medicare case at 7:30

and finished it at 11:20. The case

was billed as though there were

cwo concurrent cases, but he was

involved in other cases from 7:35

to 8:00 and from 7:30 to 8:25.

Started a Medicare case at 7:25

and finished it at 11:45. The case

was billed as though there were

two concurrent cases, but he was

involved in other cases from 9:10 -

- to 10:35 and from 7:30 to 11:45.

App. 290

Started a Medicare case at 11:55

and finished it at 15:00. The case

was billed as though there were

two concurrent cases but he was

involved in other cases from 13:15

to 14:25, from 13:55 to 17:15 and

from 14:50 to 17:20.

Location Defendant Unity Hospital

. 8/18/92 - Albay

Billed for performing two concur-

rent procedures when she was in-

volved in three concurrent pro-

cedures.

Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

cedures.

Billed for performing two concur-

rent procedures when he was in-

volved in three concurrent pro-

-cedures.

Billed for performing two concur-

rent procedures when she was in-

volved in three concurrent pro-

cedures.

App. 291

7/23/92 Castillejos Billed for performing two concur-

rent procedures when she was in-

volved in three concurrent pro-

cedures.

6/11/92 Castillejos Billed for performing two concur-

rent procedures when she was in-

volved in three concurrent pro-

cedures.

Location Defendant St. Cloud Hospital

11/3/93 Espelien Billed QK indicating a concurrency

of two for a case in OR-8 from 7:18

to 10:19. At the same time he was

doing one case in OR-9 from 7:24

to 12:11 and another in OR-4 from

9:16 to 11:17. These cases should

have been billed as a concurrency

of three.

5/12/94 Reitz, Boyle,

Halvorson Reitz started a Medicare case in

OR-9 at 7:40. At 9:00 he was re-

lieved by one of his partners —

either Boyle or Halvorson finished

the case at 10:07. Initially the

chart said Boyle took over the

case, but the chart was altered to

read that Halvorson took over the

case instead. Boyle did other cases

from 7:49 to 10:05 and from 9:15 to

9:40. Halvorson did other cases

from 7:26 to 9:55 and from 10:03 to

11:44. Regardless who relieved

Reitz, there were three concurrent

cases, yet it was billed under

Reitz’s name as though there were

. only two concurrent cases.

App. 292

5/6/94 Reitz,

Boyle —__—~Reeitz started a Medicare case in R-

4 at 7:51. At 11:26 Boyle took over

the case and finished it at 12:02.

Reitz was doing other cases from

7:25 to 10:30 and from 8:55 to 9:00.

The case was billed under Reitz’s

name as though there were two

concurrent cases, but in fact there

were three.

FALSE CLAIMS ASSOCIATED

WITH PAIN MANAGEMENT

64. In addition to the specific instances of fraud

discussed above anesthesiologists practicing at St. Cloud,

Unity, Mercy, North Memorial and Abbott Northwestern

Hospitals have submitted false claims in connection with

post-operative epidurals. Under Medicare regulations in

force since at least 1992, anesthesiologists were not

permitted to bill for epidurals which were performed

during a general anesthesia and under no circumstances

were they permitted to bill for daily management of an

epidural on the date of the surgical procedure. In fact, the

defendant anesthesiologists at St. Cloud Hospital, Unity

and Mercy Hospitals violated this restriction and, never-

theless, submitted bills to Medicare. Between 1992 and

the date of this Third Amended Complaint, it has been St.

Cloud anesthesiology defendants’ common practice to

improperly stop the anesthesia time on the anesthesia

record while the patient is still under anesthesia and the

surgery has not yet been completed in order to place a

post-operative epidural catheter. The purpose of stopping

the anesthesia time on the record is to deceive Medicare

into believing that the anesthesia procedure ended before

the post-operative epidural was placed so that the doctor

App. 293

may bill separately for the more expensive post-operative

epidural. Between 1992 and the date of this Third Amended

Complaint, defendants have on a number of occasions filed

claims with Medicare which were improper and constituted

false claims in connection with post-operative epidurals. In

particular, by way of representative example, defendants

filed the following claims on the following dates:

Date of

Procedure

Associated

With False Defendant

Claim MDA Summary of Procedure

Cases Billed Where The MDA Stopped The Anes-

thesia Time In Order To Separately Bill For

Placement Of An Epidural

Location Defendant St. Cloud Hospital

11/2/93 + Rajala Rajala billed for personally per-

forming a Medicare case in OR-5

from 7:40 to 14:40. The case was

not finished until 15:05, but De-

fendant Rajala ended her time

early in order to bill separately for

placing an epidural catheter for

post operative pain management.

Since, by her own record, she was

not involved in administering the

general anesthetic of this case for

the last 25 minutes, and did not

participate in emergence, she was

not entitled to bill for this case. In

addition, she did the pre-operative

evaluation of a patient for a case

‘that started in OR-3 at 1330,

App. 294

which would disqualify her from

billing using the AA modifier.

| MDA TIME

; ACTUAL ABORTED

ANESTHESIA TO BILL FOR

TIME EPIDURAL

5/1/93 Espelien 08:01-10:40 08:01-10:15

6/1/93 Lang 09:34-11:12 19:34-11:05

12/20/93 Zwick 07:26-10:50 17:26-10:29

: 12/29/93 Espelien 09:49-12:58 19:49-12:40

12/16/93 Boyle 09:38-12:10 09:38-11:45

12/16/93 Boeke 17:58-21:11 17:58-20:45

12/1/93 McMillan 09:20-13:20 09:30-12:58

12/1/93 Zwick 07:24-11:47 07:24-11:29

SUR TA Ges LEA ree ED Z

Other Cases Involving Improper Bills For Epidural

4 Anesthesia

3/17/93 Boeke Charged for more than four days of

i epidural management.

i 3/18/93- Boeke Charged for more than four days of

5 epidural management.

‘ 2/17/95 Boeke Charged for more than four days of

‘ : epidural management.

2/18/95 Boeke Charged for more than four days of

epidural management.

2/19/95 Boeke Charged for more than four days of

epidural management.

5/3/94

5/4/94

5/29/94

7/7/93

7/8/93

7/9/93

11/22/95

1/6/95

8/23/94

4/3/95

4/4/95

4/5/95

8/5/92

8/6/92

Boyle

Espeland

Espelien

App. 295

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Nn Si AA ented) ae EL al at ee

RI AE IE UPR Site AO

Pee ade Cer e he eines

- 8/7/92

8/8/92

8/9/92

11/23/94

12/26/92

11/22/92

11/23/92

7/11/94

12/2/95

12/3/95

12/4/95

12/14/94

6/22/94

12/6/95

Espelien

Evenson

Gacusana

Halvorson

C. Johnson

App. 296

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

12/7/95 C.Johnson

12/8/95 C. Johnson

12/9/95 C. Johnson

12/10/95 C. Johnson

12/11/95 C. Johnson

12/12/95 C. Johnson

12/13/95 C. Johnson

App. 297

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

In addition to the above representative examples,

plaintiffs have a printout of approximately 87 pages listing

similar claims by the St. Cloud defendants.

Defendant Anesthesia P.A.

4/1/92 Pizzaro

4/7/93 Hoffman

4/8/93 Hoffman

9/6/92 Mazur

1/20/92 Lader

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for 2 epidurals on the

‘ game day.

Pye ee Te

ve lS iden pi ion’ 7

(APE EON

2/5/93

8/4/93

8/5/93

8/6/93

8/7/93

8/8/93

8/9/93

3/11/95

3/12/95

3/13/95

3/14/95

3/15/95

9/4/93

9/5/93

8/30/93

Lader

Schultz

Mont-

gomery

Mont-

gomery

Wright

App. 298

Charged for 2 epidurals on the

same day.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

Charged for more than four days of

epidural management.

App. 299

Defendant MAPA

8/12/92 Baggen- Charged for more than four days of

stoss epidural management.

8/14/92 Baggen- Charged for more than four days of

stoss epidural management.

8/15/92 + Baggen- Charged for more than four days of

stoss epidural management.

DE PIT. 1

F NT CO T

65. The defendant anesthesiologists’ general practices

described above were based not on the interest of the

patient or quality of care, but rather on maximizing

defendant anesthesiologists’ profits. For example, during

the past six years the defendant anesthesiologists were

invariably present for relatively simple billable proce-

dures, such as placement of epidurals or arterial lines, but

as set forth herein, are routinely absent for more crucial

procedures such as (1) intubations (including emergency

intubations), extubations in general anesthesia cases (in

the case of Unity, Mercy and North Memorial anesthesi-

ologists); (2) dosing and managing epidurals in labor cases;

and (3) intubating and managing airways in trauma cases

which are non-billable or have relatively low reimburse-

ment value.

66. Furthermore, the defendants’ practice of leaving

the operating room for substantial periods of time is not

motivated simply by the increased income that their false

billing generates from Medicare, but also by the substan-

tially increased compensation they can earn by improperly

concurrently performing non-Medicare procedures which

pay at a substantially higher rate. Indeed, Relator’s

re a ry

App. 300

members have been informed by at least two separate

individuals familiar with anesthesia billing practices that

it would be impossible for the defendant anesthesiologists

to obtain the annual compensation they make if they were,

in fact, fulfilling the billing requirements of Medicare and

accurately billing Medicare. At the defendant hospitals

Medicare accounts for between 20%-30% of the procedures

performed. Some of these procedures are lengthy and

complex procedures such as open-heart procedures and

craniotomies lasting up to 8 or 10 hours. If the defendant

anesthesiologists actually performed those procedures as

they have represented to Medicare they would be pre-

cluded from billing for any other procedure during that

time period. In fact, as set forth herein, the defendant

anesthesiologists in almost every case are involved in

others activities, in many cases billable activities, at the

same time as they have represented to Medicare that they

are personally performing heart procedures, craniotomy

procedures and other lengthy and complex procedures. As

a result, plaintiffs are informed and believe that the

defendant MDA anesthesiologists have obtained compen-

sation far in excess of the national average and, in some

cases, in excess of $500,000 per year. It is in order to

maintain this improperly high level of compensation that

the defendants have gone to the lengths that they have as

described in this complaint to preserve their ability to

submit false claims and to punish and chill the Relator’s

members who have sought to prevent or curb their fraudu-

lent practices. ~

67. In addition to knowingly and actively aiding,

abetting and facilitating defendant anesthesiologists’

submissions of false claims and knowingly causing the

Government to pay claims grounded in fraud as set forth

App. 301

elsewhere herein and in the case of Unity and Mercy

Hospitals profiting directly from that fraud, MANA is

informed and believes that the defendant hospitals have

themselves submitted false, misleading and inaccurate

bills to Medicare which have resulted in overpayments by

Medicare. In particular, in cases of medical necessity,

defendant Abbott Northwestern, defendant Unity and

Mercy and defendant St. Cloud have submitted bills

seeking 100% reimbursement from Medicare on the basis

that it was medically necessary for both a CRNA and an

anesthesiologist to be involved in the case. Although the

information concerning anesthesia time and services

provided given to the hospital by the CRNAs was accurate,

the hospitals billed the case under an improper modifier.

As a result, Medicare paid both providers 100% of their

qualified fee. In fact, in these cases the hospital knew that

the anesthesiologists did not personally perform the case

and that, in fact, there were not two providers involved in

the case. Had the hospital correctly billed Medicare and

advised the hospital that the doctors were not personally

performing their cases, Medicare would only have been

required to pay approximately 50% of the fee it actually

paid. The hospitals also failed to bill for non-medical

direction of a CRNA when there was either no MDA

participation (cardioversions and MAC cases) or for

participation which failed to meet minimal medical direc-

tion or personal performance requirements. To facilitate

the inaccurate billings hospital medical records depart-

ments at Unity and Mercy would flag anesthesia records

not signed by MDAs and required co-signing after the fact.

This inaccurately led Medicare to assume participation by

anesthesiologists and incorrectly identified the anesthesi-

ologist billing for the procedure. Some representative

examples at the defendant hospitals are the following:

Date of

Procedure

Associated

With False Defendant

Claim MDA

App. 302

Summary of Procedure

Demonstrating MDA’s

Absence

Location Defendant Abbott Northwestern

5/9/93 Dwarkanath Drew Mathews record shows

6/15/93 Lillehei

3/3/93 Pereira

1/25/90 Skoog and

Meisner

this open heart case lasted 3

hours and 15 minutes, but

Defendant Dwarkanath was

present for only one hour and

50 minutes, yet he billed for

personally performing the

case.

Drew Mathews record shows

this case lasted 5 hours, but

Defendant Lillehei was pre-

sent for only 3 hours, yet he

billed for personally perform-

ing the case.

Drew Mathews record shows

this case lasted 5 hours and

30 minutes, but Defendant

Pereira was present for only

2 hours, yet he billed for

personally performing the

case.

Skoog started this case and

was later relieved by Defen-

dant Meisner. Drew Mathews

record shows this case lasted

6 hours and 30 minutes, but

Defendant Skoog and Defen-

dant Meisner were present

for only 4 hours and 5

minutes, yet they billed for

App. 303

personally performing the

case.

11/12/92 Tiu Drew Mathews record shows

this case (repair of an aortic

aneurysm) lasted 4 hours,

but Defendant Tiu was pre-

sent for only 1 hour and

20 minutes, yet he billed

for personally performing the

case.

10/1/90 Tronnier Drew Mathews record shows

this open heart case lasted 4

hours and 20 minutes, but

Defendant Tronnier was pre-

sent for only 2 hours and 30

minutes, yet he billed for

personally performing the

case.

6/22/93 Wintermute Drew Mathews record shows

this open heart case lasted 3

hours and 20 minutes, but

Defendant Wintermute was

present for only 1 hour and

45 minutes, yet he billed for

personally performing the

case.

Location Defendant Mercy Hospital

5/19/94 —=_ Sperry Defendant Sperry billed for

personally performing the

anesthesia for placement of

an arteriovenous shunt that

started at 12:05 p.m. and

ended at 1:30 p.m. Defendant

Sperry was doing other cases

as follows: (1) 12:50 p.m. to

2:15 pm.; (2) 9:45 a.m. to 3:08

App. 304

p.m.; (3) 1:15 p.m. to 2:30

f p.m.; and (4) 1:10 p.m. to 2:10

: p.m. At 1:30 p.m. Defendant

Sperry was involved in five

concurrent cases and was not

entitled to bill (for either

performing or medically dir-

3 ecting the case. He could

have billed for medical super-

vision and received a fee

: appropriate for his involve-

ment. In addition, this simple

procedure is not among the

CPT codes accepted by the

local Medicaye carrier as

£ “medically necessary” for two

3 providers. This case occurred

4 after CRNAs were forced to

subcontract with the ane-

sthesiologists if they wanted

to still work at Mercy Hospi-

tal. Health Billing Systems

submitted both Defendant

Sperry’s bill for personally

performing the case and a bill

for the subcontracted CRNA’s

services.

Location Defendant Unity Hospital

8/19/94 Eggen Billed for personally perform-

ing a case from 11:45 a.m. to

1:55 p.m. while performing a

case from 1:30 p.m. to 3:00

p.m. Health Billing Systems

submitted a bill for Defen-

dant Eggen using the AA

modifier and a CRNA bill for

the same case.

=~ _

3 eR We at ap eft bite

polit en Mid st Seno Malai ey

SOE AG

thy

WS ast

App. 305

9/20/94 Ryberg Billed for personally perform-

ing a case from 11:35 a.m. to

1:55 p.m. while performing a

case from 10:50 a.m. to 12:25

p.m. Health Billing Systems

submitted a bill for Defen-

dant using the AA modifier

and a CRNA bill for the same

case.

9/27/94 Maggs Billed for personally perform-

ing a case from 11:25 a.m. to

2:15 p.m. while performing

another case from 1:25 p.m.

to 3:00 p.m. Health Billing

Systems submitted a bill for

Defendant Maggs using the

AA modifier and a bill for the

CRNA subcontractor for the

same case.

Information regarding defendant St. Cloud is not in

MANA’s possession. However, plaintiff is informed and

believes, based upon its members’ knowledge of billing

practices at that hospital, that similar bills were submit-

ted by the hospital for medical necessity where MANA

members know there were not two anesthesia providers

present for the entire procedure. The specific dates and

patients’ names will appear on those bills which are

currently only in defendant St. Cloud’s possession.

CONDUCT EVIDENCING FRAUDULENT INTENT

68. The defendant hospitals and anesthesiologists

defendants have engaged in conduct in furtherance of the

above-referenced fraud for purposes of either concealing

App. 306

the fraud or perpetuating it. Examples of this conduct

include:

(1) On a substantial number of occasions, MAPA

defendants at Unity and Mercy Hospitals changed circles

on the anesthesia record which correctly reflected the

concurrency of the cases they were billing to a lower

number which misrepresented the true concurrency of the

case.

(2) It was a frequent practice for the call MDA to

go through previous days records and make changes to the

circles.

(3) Defendant Castillejos was seen circling

numbers on stacks of anesthesia records at the end of the

day which had not been circled by the anesthesiologist in

charge of the case. Defendant Magdsick on a number of

occasions was seen by Annette Atchison to circle concur-

rency the following day on cases by other MDAs. On

information and belief defendant Castillejos and Magdsick

had no knowledge that the circles that they were entering

were accurate. This was further confirmed when defen-

dant Heil stated to a Unity CRNA, Maureen Merriam,

that defendant Al Tank, MAPA’s billing person, said they

should be billing a lot more 1:1 and stated to Marie Parvie,

one of the Mercy CRNAs, that defendant Al Tank had told

her that they were “entitled to bill” about 50% of their

cases 1:1. Castillejos also stated to Maureen Merriam that

Al Tank was “upset” because Catillejos was not circling

enough cases as 1:1.

(4) The MAPA defendants made no attempt to

put times on electroconvulsive therapy or pain manage-

ment records thereby precluding Medicare from determin-

ing whether their involvement in those procedures would

App. 307

have disqualified them from billing Medicare for person-

ally performing concurrent procedures.

(5) Defendant Sperry stated to Maureen Mer-

riam that Medicare will not penalize me “if I do a small

case during a 1:1 and bill Medicare for personally perform-

ing a 1:1.

(6) In or about April 1991 or 1992 on a weekend

in connection with four consecutive fractured hip cases for

Medicare patients, defendant Rydberg circled a 1 on each

record although he was not in the operating room for the

majority of the procedure and was, in fact, up in OBGYN

on another floor giving epidurals or engaged elsewhere in

the hospital. The- specific date and times of these false

claims can be determined by reviewing the billing records

for the relevant period which are exclusively in defen-

dants’ possession at this time.

(7) Defendant Craig Johnson at St. Cloud and

defendants Mark Sperry and John Magdsick at Unity and

Mercy and defendant Mark Nissen at Abbott Northwest-

ern all stated at different times that they did not intend to

lose a single penny as a result of changing reimbursement

policies and would take whatever steps were necessary to

ensure that this occurred.

(8) Defendant Al Tank stated on repeated

occasions to CRNAs, including to Fred Benjamin, Mary

Buchman, Faye Leatherman, Kaye Vaske and others that

he kept multiple sets of books, one for the government, one

for the hospital and one for the doctors. Al Tank also told

MANA member Fred Benjamin that he had a special way

of billing that nobody else could do which would maximize

the anesthesiologists’ bills. Defendant Sperry told Annette

Atchison, CRNA they had special ways of hiding the

etiam eee

aoe wy > 407 en poh Bote Br NE ind ere 2 oie . a = bs 7 b.

App. 308

profits made by CRNAs, and told Mary Jo Krauel he was

going to have to remember which lies he told to whom.

Defendant Al Tank made no attempts to confirm whether

the anesthesiologist doctors for which he was submitting

bills were following Medicare regulations. MAPA defen-

dants made no attempt to determine whether or not their

billing persons, Al Tank and Carol Kolbinger, were appro-

priately following Medicare regulations.

(9) The MAPA defendants, despite the use of an

expensive software program to determine concurrencies,

consistently submitted incorrect bills to Medicare between

1992 and 1994 resulting in most cases in over payments to

MAPA. When the law was changed in January 1994 to

provide that supervising additional concurrent procedures

would not reduce the anesthesiologist’s fee, these errors

decreased substantially.

(10) Ladonna Schweer and Terry Rozinka

repeatedly asked to see Medicare Denials at Unity and

Mercy to appeal those which were incorrect, but the

hospitals refused to allow the CRNAs to review them.

When Chuck Hauwiller and Drew Mathews began docu-

menting MDA presence in the room during a case, they

received a warning from the hospital and the defendants

MDAs to stop.

(11) Even though CRNAs at St. Cloud, Unity,

Mercy and Abbot Northwestern presented records to each

of those defendant hospitals showing not only that the

doctors were not present at key times during procedures

they had billed but, in fact, that those doctors were in

other operating rooms. The hospitals refused to seek a

change in the practice of the doctors in their hospitals or to

directly address the doctors’ proven fraudulent billing.

App. 309

(12) At all times, defendant hospitals have been

or should have been aware that defendant anesthesiolo-

gists were presenting false claims to Medicare. Rather

than taking steps to prevent the fraud, however, Defen-

dant hospitals have knowingly aided, abetted and facili-

tated it.

(13) In 1990, Faye Leatherman confronted one

of the MDAs who was circling the wrong number for

concurrencies on the anesthesia record, she was told to

mind her own business.

(14) Between 1990 and 1994, Bart Barry, a

CRNA hospital employee, was circling the correct concur-

rencies on the anesthesia records in which he was in-

volved. He was told by both defendant Sperry and

defendant Janossy to stop circling the numbers.

(15) Ladonna Schweer told Judy Haviland and

John Murphy, both Operations Vice Presidents of Unity

and Mercy, and Dan Roach, corporate counsel, that the

Unity and Mercy anesthesiologists were not personally

performing cases and were billing for cases when they

were in other operating rooms. The hospital took no steps

to stop this practice.

(16) Lisa Citak, a CRNA at Abbott Northwest-

ern, repeatedly reported that the doctors were fraudu-

lently billing to hospital personnel but received no

response other than blanket denials that fraudulent

billing was occurring.

(17) At defendant St. Cloud, Sandra Henschke,

Jerry Boldon and other CRNAs reported directly their

belief that the defendant doctors were fraudulently sub-

mitting bills since the CRNAs were performing the services

PMLA TES APE TAGE MA ERE EI LI >

ee ne ane COS ey SAT SA

App. 310

and the doctors were in other operating rooms. St. Cloud

Hospital took no action to address this fraud.

(18) John O’Konek, a CRNA at Unity, and Bart

Barry, a CRNA at Mercy, observed on a number of occa-

sions defendant anesthesiologists in the hospital were

covering four to five concurrent procedures. The specific

times and dates of these procedures are not available at

this time but can be discovered through review of the

appropriate anesthesia records in possession of the defen-

dants. It was a common practice for anesthesiologists to

start cases and turn them over to MDAs who were already

responsible for 2-3 room. Documentation on the anesthesia

record or billing, did not reflect these changes.

(19) In a case involving Faye Leatherman when

she was a student at Abbott Northwestern, defendant

Pereira left Leatherman alone in the room with an ex-

tremely difficult heart surgery. Leatherman paged Pereira

on multiple occasions and Pereira failed to respond. Later

when the patient was taken to PACU a comment was

made by the PACU nurse when she learned that Pereira

had failed to respond that the patient must have been a

Medicare patient. Chuck Hauwiller repeatedly paged for

assistance with a patient who was hemorrhaging, but

defendant Rick Johnson failed to respond. In a recent case

at Abbott Northwestern, Pereira followed his general

practice of failing to frequently monitor the case and

failing to respond to pages. As a result of Pereira’s failure

to respond to pages, his giving inappropriate telephone

orders given without being present to assess the patient,

and creating an environment where CRNAs are restricted,

the patient died. This incident, unbeknownst to MANA or

its members, was reported by a non-CRNA to the Depart-

ment of Health. The Department of Health independently

App. 311

investigated the incident on behalf of HCFA and concluded

that Abbott Northwestern was deficient in several areas of

anesthesia, including: 42 C.F.R. 482.12(a) Medical Staff

(A022), 42 C.F.R. 482.21(a) Clinical Plan (A054); 42 C.F.R.

482.52(a) Organization and Staffing (A264); 42 C.F.R.

482.52(b) Delivery of Services (A279). In connection with

these findings, HCFA noted (a) it was reported and veri-

fied by interview that some anesthesiologists failed to

appropriately respond to their pagers; (b) that delay of

reviews of quality assurance matters in the anesthesia

department for five months were not unusual; (c) that

student registered nurse anesthetists were allowed by the

hospital and the MDAs to provide anesthesia without

being under the direct supervision of a CRNA or an MDA;

(d) that a record review revealed at least two occasions

where the only signature of an anesthesia provider on the

record was a student anesthetist; (e) that an MDA inter-

viewed by HCFA admitted that he routinely responded

late to pages to the PACU; and (f) that documentation

revealed that the MDA defendants in this case did not

always assist with the transport of ASA-4 patients to the

PACU.

The foregoing findings corroborate the allegations of

this complaint and demonstrates the hospital’s unwilling-

ness to address concerns brought to its attention by the

CRNAs. Further proof of the hospital’s complicity in this

fraud is its attempt to cover up the investigation by

intimidating CRNA witnesses and attempting to blame

the whole incident on the CRNAs involved rather than

investigating and appropriately sanctioning the MDA

responsible for the case.

(20) At Abbott Northwestern, defendant Boen-

ing, twice in the space of a month, left a patient unat-

tended in a surgery with no CRNA and no MDA present.

"Sak bes GaGa aa ee me ee

WOE ats frida Sahay cskeharidaet Ween Rae aah Neh VE

App. 312

On the first occasion, defendant Boening relieved a CRNA

responsible for the case and told her to go to lunch and

then Boening left the room. The CRNA discovered Boening

outside the operating room when she returned from lunch.

In the second case, the CRNA was Curt Pascoe. Boening

instructed him to go obtain medication from a locked

medicine cabinet. When Pascoe returned, Boening was

sitting talking on the telephone outside the operating

room and there was no anesthesia provider in the room

with the patient and the surgeon.

(21) Defendant Albay was discovered sleeping

during a case by Fred Benjamin, the CRNA involved with

the case. Defendant Baggenstoss appeared to have been

sleeping during a case involving Bart Barry.

(22) Maureen Merriam repeatedly observed that

MDAs were sleeping at night during cases for which she

was the responsible CRNA and yet marking that they

' _ personally performed the case on the record.

(23) In a case involving Bart Barry, on which

defendant Maggs was the responsible anesthesiologist

which occurred during the relevant time period to the

complaint, Maggs was watching a movie and did not

respond when paged by Barry. Maureen Merriam was

unable to get defendant Maggs to respond to an unstable

patient because he was on the phone with his wife about a

charity ball.

(24) Many of the anesthesiologists at Unity and

Mercy Hospital owned beepers but intentionally did not

carry them with them when they were at the hospital. In

1993, Bart Barry twice stat paged defendant Roseberg to

App. 313

the OR and never responded. Annette Atchison paged

defendant Magdsick several times at the surgeons request

and he did not respond. Defendant Suh did not respond to

a page from Bart Barry when his patient undergoing heart

surgery was coming off bypass. A patient which defendant

Castillejos was responsible for died in the preoperative

holding area while she was in the Doctor’s Lounge next

door. Because of this reported lack of response, Ladonna

Schweer raised the issue that the Unity and Mercy MDAs

do not carry beepers but the hospital refused to require

them to do so.

(25) CRNAs at Mercy, Abbott Northwestern, St.

Cloud and North Memorial were told by the defendant

anesthesiologists that it was the general practice for

anesthesiologists at those hospitals to bill heart cases on a

1:1 basis. At Abbott Northwestern an inordinately large

percentage of the cases performed are heart cases. In

1994, as a result of what they perceived to be changes in

.. Medicare billing reimbursement policies, the Abbott

Northwestern MDAs unilaterally announced that they

were going to take over four of the eight operating rooms

reserved for hearts and would refuse to allow CRNAs to be

involved in those cases. This decision was admitted to be

based solely upon economics and was unrelated to quality

of care concerns.

(26) In fact, after they assumed control over the

heart rooms, the defendant anesthesiologists utilized

student nurse anesthetists to perform procedures in those

rooms and continued routinely to leave the room, leaving

the only anesthesia provider in the room an inexperienced

student CRNA.

App. 314

(27) None of the anesthesiologist defendants docu-

mented the services they were providing in an appropriate

manner to satisfy Medicare regulations. In particular,

none of the anesthesiologists signed in and out of the

room when they left the room; none of them documented

on the anesthesia chart that they had personally partici-

pated in emergence; they very rarely documented when

another anesthesiologist assumed the case or relieved

them on a case; and they failed to appropriately document

concurrent procedures performed by them during Medi-

care cases. At best, the foregoing showed a complete

disregard for the Medicare billing requirements and the

needs of their patients. At worst, the foregoing demon-

strates an intentional and organized effort to deceive

Medicare and to provide Medicare and relator of appropri-

ate records to prove defendants’ fraudulent conduct.

HARASSMENT AND INTIMIDATION OF CRNAS

WHO REPORTED THE FRAUD OR ASSISTED

THIS ACTION

69. The False Claims Act specifically provides for

protection for CRNAs who report false claims or assist in

prosecution of a false claims action. Following are exam-

ples of attempts to intimidate the principal witnesses in

the case against the defendants and further demonstrate

defendant anesthesiologists’ and hospitals’ complicity:

a. When defendant Boeke was personally served

with a copy of the Summons and Complaint in a related

antitrust action alleging fraud on behalf of the doctors, he

stated referring to the plaintiffs in the case, “They're dead,

they’re dead.”

App. 315

b. Plaintiff Ladonna Schweer has had both the

passenger window of her car shattered and the hood of her

car dented while it was parked in the Unity and Mercy

parking lot. These actions occurred subsequent to defen-

dant John Murphy requesting that security provide him

with the identify of and license plate number of Ladonna

Schweer’s car.

c. An unknown individual illegally entered into

the locker of Steve Milliken, a CRNA who has provided

evidence in connection with this case, and cut the tongue

of out of one of his shoes. On information and belief the

only individuals who would have access to the identity and

combination of Steve Milliken’s locker would be the

defendant MDAs or the defendant Abbott Northwestern

Hospital.

d. CRNA Lisa Citak who reported fraud at

Abbott Northwestern was approached by defendant

Meredith during an anesthesia procedure who made veiled

threats about Citak’s ability to support her husband (who

is severely ill) and family if the plaintiffs continued to

pursue this lawsuit.

e. Anesthesiologists at various of the defendant

hospitals made statements to CRNAs to the effect that by

pursuing reimbursement for billing for anesthesia proce-

dures the CRNAs had stuck their heads out of a fox hole

and were getting them shot off. This was specifically said

by Defendant Baggenstoss to Ladonna Schweer at Unity

and Mercy Hospital, then by defendant Sperry to John

O’Konek and by defendant Kleopper to Maureen Merriam.

f. When Ladonna Schweer complained about the

MAPA defendants’ fraudulent billing to officers at Unity and

Mercy Hospitals, she was repeatedly told to “remember

App. 316

where your paycheck comes from.” This statement was

specifically made to her by John Murphy, Operations Vice

President of Unity and Mercy Hospitals.

g. When the MDAs learned that Chuck Hau-

willer, a CRNA at Abbott Northwestern, was recording

when they were absent from the operating room and

absent at emergence, defendant Johnson, President of

defendant Northwest Anesthesia, wrote a memo instruct-

ing him to stop doing so. When he refused to do so, the

hospital, in complicity with the MDaAs, called Hauwiller

into a meeting where direct and indirect threats to his

employment were made if he did not stop making nota-

tions on the anesthesia record.

70. Among other things, Defendant hospitals have

knowingly (1) permitted defendant anesthesiologists to bill

in a manner which impedes discovery of their false claims;

(2) refused to require defendant anesthesiologists to sign

in and out of operating rooms; (3) In the case of Unity and

Mercy, refused to require defendant anesthesiologists to

carry “pagers”; (4) ignored and discouraged complaints by

Relator’s members concerning the anesthesiologists’ false

and fraudulent billing practices; (5) denied CRNAs who

had signed over their billing rights to the hospitals, access

to Medicare denials for review and appeal; and (6) in the

case of defendants Unity, Mercy, Abbott Northwestern and

St. Cloud, retaliated against Relator’s members for report-

ing such fraud. Defendant hospitals did not appropriately

bill using a non-directed CRNA modifier when they knew

the anesthesiologists were not participating in some

procedures and not meeting minimal medical direction or

personal performance requirements in others. Instead,

they allowed — and expected MDAs to come to medical

records and sign cases they were not involved in. This

App. 317

practice resulted in Medicare paying almost twice as

much.

71. Most notably, after CRNAs (members of Relator)

at defendants Unity and Mercy Hospitals reported to those

hospitals (including directly to defendant Murphy) and

produced to them records documenting instances of

fraudulent billing by anesthesiologist defendants, those

hospitals, in concert with the anesthesiologists, fired the

CRNAs and pressured them to become employed by the

anesthesiologists.

72. Essentially the same scenario unfolded at defen-

dant St. Cloud Hospital. In 1992, CRNA supervisors on

behalf of the entire staff wrote and verbally complained

about the fraudulent billing. Thereafter, they were first

downgraded from medical associates to medical assistants

and then fired and coerced to work for the defendant St.

Cloud anesthesiologists.

73. The hospital defendants were motivated in the

concerted action by (1) the desire to permit the anesthesi-

ologists to continue their fraudulent billing practices; and

(2) the desire of the hospitals to avoid confrontation with

the anesthesiologists over — but simultaneously to distance

themselves from — the anesthesiologists’ fraud. The firing

by the hospitals and rehiring by the anesthesiologists of

the CRNAs was calculated to accomplish these purposes

by giving the anesthesiologists sole control over billing for

all anesthesia services — whether performed by the MDAs

themselves, by CRNAs themselves, or by a combination of

the two — thereby eliminating the risk that CRNAs would

continue to expose the anesthesiologists’ fraud by submit-

ting to Medicare and others separate bills belying the

fraudulent bills submitted by the anesthesiologists.

App. 318

74. Relator is informed and believes that the global

elimination of CRNAs as employees of the hospitals and

use of economic coercion, including- severance pay, to

compel the CRNAs to be employed by defendant anesthe-

siologists was planned and coordinated by defendants. In

addition, St. Cloud, Unity, Mercy and Abbott Northwest-

ern hospitals coordinated the termination of CRNAs and

exchanged information between themselves in order to

facilitate this result for the benefit of MDAs. In order to

conceal what defendant hospitals knew to be facilitation of

defendant anesthesiologists’ billing fraud, defendants

engineered a pretext whereby defendants claimed that

various of defendant hospitals were losing money on

CRNAs when, in fact, those hospitals own records demon-

strate that the CRNA employees were profitable. Defen-

dant hospitals were also motivated by their desire to

perpetuate an even wider fraud on the insurance compa-

nies and citizens of Minnesota which would actually

" increase the cost of anesthesia to patients and insurers

rather than decrease it.

ENORMITY OF DEFENDANTS’ UD

75. It is estimated that between 1988 and the date of

this Third Amended Complaint, defendant anesthesiolo-

gists collectively submitted in excess of 100,000 individual

false claims for time-billed procedures to Medicare for

services performed at their hospitals and received at least

$13 million. Relators currently have inforthation support-

ing the conclusion that by the end of 1994 defendants had

submitted approximately 88,000 false claims. Relator is

informed and believes these claims were false or fraudu-

lent claims under Section 3729 because they did not satisfy

one or more of the requirements for reimbursement.

App. 319

Furthermore, MANA is informed the defendants’ fraud is

continuing and ongoing as of the date of this Third

Amended Complaint.

76. Defendants are liable under 31 U.S.C. §§3729

and 3730 for (a) penalties in the maximum amount of

Ten Thousand Dollars ($10,000.00) for each of these

approximately 100,000 claims or One Billion Dollars

($1,000,000,000), plus (b) three times the amount of

damages which the Government has sustained as a result

of defendants’ false claims which plaintiffs estimate to be

approximately $39 million.

COUNT ONE

77. Plaintiff repeats and realleges the allegations

contained in paragraphs 1 through 76 as if the same were

set forth herein.

78. As more particularly set forth in the forgoing

paragraphs, both defendant anesthesiologists and defen-

dant hospitals have knowingly presented, or caused to be

presented, to officers or employees of the United States

Government, false or fraudulent claims for payment or

approval in violation of 31 U.S.C. §3729(a)(1).

CO TW

79. Plaintiff repeats and realleges the allegations

contained in paragraphs 1 through 78 as if the same were

set forth herein.

80. Defendant anesthesiologists and hospitals have

knowingly made, used, or caused to be made or used, false

records or statements to get false or fraudulent claims

App. 320

paid or approved by the Government in violation of 31

U.S.C. §3729(a)(2).

COUNT THREE

81. Plaintiff repeats and realleges the allegations

contained in paragraphs 1 through 80 as if the same were

set forth herein.

82. Defendant hospitals and anesthesiologists and

their defendant agents have conspired to defraud the

Government by obtaining or seeking to obtain allowance

and payment of false or fraudulent claims allowed or paid

in violation of 31 U.S.C. §3729(a)(3).

COUNT FOUR

83. Plaintiff repeats and realleges the allegations

contained in paragraphs 1 through 82 as if the same were

‘ set forth herein.

84. Defendant hospitals and anesthesiologists and

their defendant agents have knowingly made, used, or

caused to be made or used, false records of statements to

conceal, avoid, or decrease obligations to pay or transmit

money or property to the Government in violation of 31

U.S.C. §3729(a)(7).

COUNT FIVE

85. In addition to the misconduct described in

the foregoing Counts, defendant hospitals have violated

their obligations under their provider agreements with

Medicare and have further conspired with defendant

App. 321

anesthesiologists to submit false and/or fraudulent claims

to the United States Government.

WHEREFORE, on behalf of the United States Gov-

ernment, Relator demands judgment against each of the

above-named defendants, jointly and severally, as follows:

a. That by reason of the violations of the False

Claims Act as set out in the First through Fourth Causes

of Action, this Court enter judgment against Defendants

in an amount up to Three (3) times the amount of damages

the United States Government has sustained because of

Defendants’ actions, plus a civil penalty of not less than

Five Thousand Dollars ($5,000.00) and not more than Ten

Thousand Dollars ($10,000.00) for each separate claim

which constitutes a violation of 31 U.S.C. §3729;

b. That Relator as Qui Tam Plaintiff be awarded the

maximum amount allowed pursuant to Section 3730(d) of

the False Claims Act and/or any other applicable provision

of law;

c. That Relator be awarded all costs of this section,

including attorneys’ fees and court costs;

d. That Relator be awarded its expenses in connec-

tion with this action pursuant to 31 U'S.C. Section 3729.

e. That appropriate injunctive relief pursuant to 31

U.S.C. §3730(h) be awarded to Relator’s members and

others who have taken or may take lawful action in

furtherance of this Complaint; and

App. 322

f. That Plaintiff and the Relator receive such other

and further relief as the Court may deem to be just and

proper.

FREEDMAN & STONE

70 Hilltop Road

Ramsey, New Jersey 07446

(201) 825-3311

BY: /s/ David S. Stone

David S. Stone (8580)

WILLIAM S. ROSEN, ESQ.

2510 Minnesota World Trade

Center

30 East Seventh Street

St. Paul, Minnesota 55101

(612) 227-7731

/s/ William S. Rosen

William S. Rosen (9349X)

Herbert J. Stern (3169)

STERN & GREENBERG

75 Livingston Avenue

Roseland, New Jersey 07068

(201) 535-1900

Attorneys for Plaintiffs

Dated: March 20, 1997

App. 323

TRIAL BY JURY

Plaintiffs hereby demand a trial by jury as to all

issues.

FREEDMAN & STONE

70 Hilltop Road

Ramsey, New Jersey 07446

(201) 825-3311

BY: /s/ David S. Stone

David S. Stone (8580)

WILLIAM S. ROSEN, ESQ.

2510 Minnesota World Trade

Center

30 East Seventh Street

St. Paul, Minnesota 55101

(612) 227-7731

By: /s/ William S. Rosen

William S. Rosen (9349X)

Herbert J. Stern (3169)

STERN & GREENBERG

75 Livingston Avenue

Roseland, New Jersey 07068

(201) 535-1900

Attorneys for Plaintiffs

Dated: March 20, 1997

App. 324

EXHIBIT “A”

The attached Exhibit is based upon partial information concerning the bills submitted to Medicare by the defendant anesthesiologists during the relevant time

period. The numbers contained in the Third Amended Complaint are based upon Relator’s estimation of the total number of bills actually submitted. The total

number of false claims for which plaintiffs have documentation is approximately 88,000 as set forth herein. However, the schedule does not include fraudulent

bills for medical direction submitted by the St. -Cloud and Abbott Northwestern anesthesiologists and further does not include bills for medical direction from

Unity, Mercy, North Memorial and Abbott Northwestern from 1994 to date.

Total Paid AA 95% Total PaidTotal Cases 95% Total ' Total Total

Cases AA Cases AA Cases AA Fraudulent Penalties

Payments

Summary for Provider = 059000456-Boeke, Gary (1574 detail records)

$132,954.86 $128,310.27 613.00 487.35 $128,310.27 $4,873,500

Summary for Provider = 059000457 — Boyle, Phillip (1383 detail records)

$158,739.35 $153,831.91 613.00 582.35 $153,631.91 $5,823,500

Summary for Provider = 059000458 — Espeland, Lee (1973 detail records)

$31,584.98 $31,124.99 178.00 170.05 $31,124.99 $1,700,500

Summary for Provider = 059000459 — Espelien, Alan (1374 detail records) :

$79,963.38 $77,432.72 496.00 471.20 $77,432.72 $4,712,000

Summary for Provider = 059000460-Evenson, Curtis (525 detail records)

$58,572.71 $57,933.89 220.00 209.00 $57,933.98 $2,090,000

Summary for Provider = 059000461 — Gacusana, Joseph (693 detail records)

$35,816.73 $34,943.30 232.00 220.40 $34,943.30 $2,204,000

Summary for Provider = 059000462 — Halvorson, Paul (1835 detail records)

$100,142.53 $97,153.66 438.00 416.10 $97,153.66 $4,161,000

Summary for Provider = 059000463 — Johnson, Craig (1429 detail records)

$122,589.13 $118,419.89 486.00 461.70 $118,410.99 $4,617,000

Summary for Provider = 059000464 — Johnston, Dan (213 detail records) |

$23,446.50 $22,884.24 107.00 101.65 $22,884.24 $1,016,500

—

Summary for Provider = 059000465 — Lang, Lance (1041 detail records) app. 35

$80,265.08 $76,840.11 364.00 345.80 $76,840.11 $3,458,000

Summary for Provider = 059000466 — McMillan, Alan (956 detail records) |

$71,117.84 $67,561.97 330.00 313.50 $67,561.97 $3,135,000

Summary for Provider = 059000467 — Rajala, Mary (282 detail records)

$13,635.38 $12,953.62 81.00 74.85 $12,953.62 $769,500

Summary for Provider = 059000468 — Reitz, Alan (800 detail records)

$56,632.51 $53,800.88 247.00 234.65 : $53,800.88 $2,346,500

Summary for Provider = 059000469 — Rice, William (1648 detail records)

$76,318.16 $73,762.10 486.00 442.70 $73,762.10 $4,427,000

Summary for Provider = 059000471 — Zwick, Annette (906 detail records)

$73,251.13 $69,588.57 289.00 274.55 $69,588.57 $2,745,500

Summary for “FAC” = AASC (16459 detail records)

$1,114,829.11 $1,076,342.34 5,061.00 4,807.95 $1,078,342.34 $48,079,500

App. 326

Total Paid AA 95% Total Total 95% Total Total Paid 95% Total Total 95% Total Total Fraudu- Total# Total

Cases Paid AA Cases Cases AA CasesAA Medically Paid Medically Medically lent Payments Fraudulent Penalties

Directed Medically Directed Directed Cases

Cases Cases Cases

Summary for Provider = 050000172 — Pizarro, Remi (725 detail records)

$73,982.41 $23,758.84 112.00 106.40 $52,111.04 $51,774.46 614.00 583.30 $75,533.30 489.70 $6,897,000

Summary for Provider = 050000173 — Everly, Stephen (444 detail records)

$21,571.17 $21,409.47 108.00 102.60 $26,599.52 $26,361.25 336.00 319.20 $47,770.71 421.80 $4,218,000

Summary for Provider = 050000174 — Meredith, John (587 detail records)

$24,623.68 $24,403.06 120.00 114.00 $43,885.38 $43,534.16 477.00 453.15 $67,937.22 567.15 $5,671,500

Summary for Provider = 050000175 — Hoffman, J (689 detail records)

$33,371.38 $33,147.91 132.00 125.40 $43,431.58 $42,994.72 557.00 529.15 $76,142.63 654.55 $6,545,500

Summary for Provider = 050000176 — Mazer, Thomas (581 detail records)

$28,154.90 $27,916.75 113.00 107.35 $37,804.57 $37,602.06 478.00 454.10 $65,518.81 561.45 $5,614,500

Summary for Provider = 050000177 — Lader, Steven (778 detail records)

$33,608.92 $33,397.68 137.00 130.16 $47,289.77 $48,777.92 641.00 608.95 $80,175.80 739.10 $7,491,000

Summary for Provider = 050000178 — Petersen, Michael (743 detail records)

$29,626.92 $29,331.49 147.00 139.65 | $45,863.14 $45,509.20 598.00 566.20 $74,840.68 705.85 $7,058,500

Summary for Provider = 050000179 — A!more, William (710 detail records)

$32,723.12 $32,461.54 149.00 141.56 $45,416.91 $45,091.99 561.00 532.95 $77,553.53 674.50 $6,745,000

Summary for Provider = 050000180 — Schultz, David (779 detail records)

$31,023.96 $30,706.50 121.00 114.95 $42,255.14 $41,868.72 658.00 625.10 $72,595.30 740.05 $7,400,500

Summary for Provider = 050000181 — Montgomery, Michael (681 detail records)

$33,462.05 $33,204.53 128.00 121.60 $41,386.05 $40,946.70 553.00 525.35 $74,151.23 646.95 $6,469,500

Summary for Provider = 050000274 — Benthall, Carolyn (25 detail records)

$340.16 $334.56 3.00 2.85 $2,304.54 $2,258.89 22.00 20.90 $2,593.45 23.75 $237,500

Summary for Provider = 050000299 — Monehart, Daniel (803 detail records) Arp.

$26, 104.56 $25,934.87 104.00 98.80 $52,418.27 $51,953.97 699.00 684.05 $77,888.64 762.85 $7,628,500

Summary for Provider = 050000068 — Walker, Brian (626 detail records)

$23,167.19 $23,006.33 107.00 101.85 $37,065.91 $36,609.60 519.00 491.05 $59,475.93 594.70 $5,947,000

Summary for Provider = 050000368 — Wright, Thomas (605 detail records)

$23,082.62 $22,976.72 103.00 97.85 $36,313.40 $36,013.55 503.00 477.85 $58,990.26 575.70 $5,757,000

Summary for Provider = 060000434 — Larson, Loren (282 detail records)

$3,748.46 $3,714.27 33.00 31.35 $18,587.87 $18,400.91 249.00 236.55 $22,115.18 267.9 $2,679,000

Summary for Provider = 060000550 — Schoenecker, Joan (117 detail records)

$11,346.40 $11,278.68 58.00 53.20 $2,775.10 $2,754.54 61.00 57.95 $14,033.22 111.15 $1,111,500

Summary for Provider = 050000633 — Adkins-Finke, Bonnie (25 detail records)

$2,839.42 $2,916.38 25.00 23.75 $0.00 $0.00 0.00 0.00 $2,916.38 23.75 $237,500

Summary for Provider = 050000654 — Hendricks, John (9 detail records) 7

$1,847.34 $1,802.81 8.00 8.55 $0.00 $0.00 0.00 0.00 $1,802.91 8.55 $85,500

Summary for Provider = 061610845 — Anesthesiology, PA (201 detail records) ee.

$51,292.98 $50,909.76 201.00 190.95 $0.00 - $0.00 0.00 0.00 $50,999.78 190.95 $1,908,500

| Summary for Provider = 060000470 — Smith, Weston (1 detail record) |

| $0.00 $0.00 0.00 0.00 $227.36 $215.99 1.00 0.95 _ $215.99 0.95 $9,500

Summary for “FAC” = Metro Anesthesia Network (9431 detail records)

$1,358,646.97 $1,508,848.50 6,967.00 6,618.63 $1,417,339.97 $1,380,875.50 18,923.00 17,976.85 $2,889,674.00 24,525.50 $245,955,000

App. 328

Total Paid AA 9% Total Total 935% Total Total Paid 95% Total Total 95% Total Total Fraudu- Total # Total

Cases Paid AA Cases Cases AA Cases AA Medically Paid Medically Medically lent Payments Fraudulent Penalties

Directed Medically Directed Directed Cases

Cases Cases Cases

Summary for Provider = 050000071 — Metro Anesthesia Network (8706 detail records)

$326,895.03 $321,830.29 1,661.00 1,577.95 $426,236.80 $416,736.22 5,046.00 4,793.70 $738,566.51 6,371.65 $63,716,500

Summary for Provider = 050000072 — Abbey, Thelma (393 detail records)

$15,133.79 $14133.79 90.00 85.50 $26,337.07 $25,873.65 303.00 287.85 $40,480.58 373.35 $3,733,500

Summary for Provider = 050000073 — Baggenstoss, Gary (567 detail records)

$32,876.84 $32,072.51 123.00 116.85 $31,848.02 $31,332.93 434.00 412.30 $63,405.44 529.15 $5,291,500

Summary for Provider = 050000074 — Castillejos, Minda (300 detail records)

$9,607.68 $9,213.96 68.00 64.60 $18,886.80 $18,525.96 232.00 220.40 $27,738.93 285.00 $2,860,000

Summary for Provider = 050000075 — Cumming, James (730 detail records)

$27,441.41 $26,909.02 151.00 143.45 $41,847.98 $41,116.35 579.00 550.05 $68,025.37 693.50 $8,935,000

Summary for Provider = 050000077 — Hong, Sang (620 detail records)

$13,092.78 $12,663.57 95.00 90.25 $39,417.71 $38,799.49 525.00 496.75 $51,463.07 598.00 $5,890,000

Summary for Provider = 050000079 — Kloepper II, Raymond (691 detail records)

$26,597.44 $25,798.78 155.00 147.25 $39,232.33 $38,543.05 536.00 509.20 $64,341.83 656.45 $6,584,500

Summary for Provider = 050000080 — Magdsick, John (531 detail records)

$23,313.47 $22,537.81" 112.00 106.40 $34,093.54 $34,051.99 419.00 396.05 $56,589.81 504.45 $5,044,500

Summary for Provider = 050000081 — Maggs, Thomas (480 detail records)

$31,697.53 $30,485.92 142.00 134.90 $28,689.19 $28,120.85 338.00 321.10 $58,806.77 456.00 $4,560,000

Summary for Provider = 050000082 — Roseberg, John (546 detail records)

$48,630.57 $47,124.74 180.00 171.00 $28,003.65 $27,507.97 368.00 347.70 $74,632.71 516.70 $5,187,000

Summary for Provider = 050000083 — Rydberg, John (351 detail records)

$14,378.82 $13,865.89 104.00 98.80 $22,477.10 $22,130.78 247.00 234.65 $35,996.48 333.45 $3,334,500

App. 329

Summary for Provider = 050000084 — Sperry, Mark (435 detail records)

$22,389.03 $21,618.18 106.00 100.70 $27,173.98 $26,858.37 329.00 312.55 $48,273.53 413.25 $4,132,500

Summary for Provider = 060000085 — Suh, Jei (781 detail records)

$31,248.85 $30,383.30 168.00 180.56 $44,827.64 $43,923.08 612.00 581.40 $74,306.38 741.95 $7,419,500

Summary for Provider = 050000324 — Potts, Thomas (518 detail records)

$23,432.89 $22,658.67 113.00 107.35 $31,069.37 $30,484.36 406.00 385.70 $53,343.03 493.05 $4,930,500

Summary for Provider = 050000344 — Janossy, Theodore (393 detail records)

$23,471.43 $22,783.61 106.00 100.70 $24,548.14 $24,164.13 287.00 272.65 $46,947.74 373.35 $3,733,500

| Summary for Provider = 050000371 — Yue, Jeffrey (449 detail records)

$24,556.08 $23,810.40 123.00 116.85 $22,939.05 $22,470.34 326.00 309.70 $46,280.74 426.55 $4,265,500

Summary for Provider = 050000386 — Heil, Teri (321 detail records)

$18,107.92 $17,575.11 102.00 96.90 $15,455.32 $15,091.27 219.00 208.05 $32,666.38 304.95 $3,049,500

Summary for Provider = 050000605 — Eggen, Mark (37 detail records)

$8,914.96 $8,469.21 37.00 35.15 $0.00 $0.00 0.00 0.00 $8,489.21 35.15 $351,50C

Summary for “FAC” = MAPA (14839 detail records)

$2,272,283.21 $2,213,494.42 10,603.00 10,072.85 $2,320,929.04 $2,264,278.69 30,126.00 28,619.70 $4,479,773.12 38,692.55 $386,925,500

App. 330

Total Paid AA 95% Total Paid Total Cases 95% Total Total Total

heii Cases AA Cases AA Cases AA Fraudulent Penalties

Payments

Summary for Provider = 050000100 — Tiu, Otello (1087 detail records)

$83,729.11 $82,343.87 268.00 254.60 $82,343.87 $2,546,000

i) Summary for Provider = 050000101 — Stauffer, William (498 detail records)

$6,409.11 $6,197.07 60.00 57.00 $6,197.07 $570,000

Summary for Provider = 050000102 — Peterson, John (1368 detail records)

$52,893.92 $52,739.62 165.00 156.75 $52,739.62 $1,567,500

Summary for Provider = 050000103 — Giron, Luis (1212 detail records)

$150,698.72 $147,644.73 481.00 456.95 $147,644.73 $4,569,500

Summary for Provider = 050000104 — Pereira, Xavier (972 detail records)

$92,664.25 $90,846.24 324.00 307.80 $90,846.24 $3,078,000

Summary for Provider = 050000105 — Skoog, Richard (1243 detail records)

$147,740.68 $144,938.21 415.00 394.25 $144,938.21 $3,942,500

Summary for Provider = 050000106 — Menzel, M (1026 detail records)

$97,389.48 $95,945.35 290.00 275.50 $95,945.35 $2,755,000

Summary for Provider = 050000107 — Beverlin, Bryce (190 detail records)

$175,765.81 $172,364.48 503.00 477.85 $172,364.48 $4,778,500

Summary for Provider = 050000108 — Dwarkeneth, Rajarso (1351 detail records)

$156,385.12 $163,541.68 441.00 418.95 $153,541.68 $4,189,500

Summary for Provider = 050000109 — Shaw, Jeffrey (1171 detail records)

$133,556.01 $131,081.90 461.00 437.95 $131,081.90 $4,379,500

Summary for Provider = 050000110 — Trennier, Robert (1129 detail records)

$104,175.99 $102,335.49 312.00 296.40 $102,335.48 $2,984,000

Summary for Provider = 050000111 — Nissen, Mark (1608 detail records)

$208,341.93 $204,406.30 585.00 665.25

$204,408.30

$5,652,500

Summary for Provider = 050000112 —- Gudman, John (755 detail records)

$49,269.35 $48,137.75 272.00 258.40

$48,137.75

$2,584,000

Summary for Provider = 050000113 — Munich, James (1128 detail records)

$124,667.88 $122,547.68 401.00 380.95

$122,547.68

$3,809,500

Summary for Provider = 050000114 — Gayes, James (1485 detail records)

$233,645.80 $228,154.49 747.00 709.85

$228,154.49

$7,096,500

Summary for Provider = 050000115 — Johnson, Richard (1090 detail records)

$106,902.63 $107,058.12 352.00 334.40

$107,056.12

$3,344,000

Summary for Provider = 050000116 — Boening, Joan (988 detail records)

$47,597.23 $46,568.23 240.00 228.00

$46,568.23

$2,280,000

Summary for Provider = 050000117 — Groves, Nancy (771 detail records)

$18,632.45 $18,431.00 105.00 99.75

$18,431.00

$997,500

Summary for Provider = 050000118 — Wintermute, John (1275 detail records)

$153,502.54 $150,312.62 408:00 387.60

$150,312.62

$3,496,000

Summary for Provider = 050000119 — Meisner, Judith (1062 detail records)

$114,865.58 $113,050.00 368.00 349.60

$113,050.00

$3,496,000

Summary for Provider = 050000120 — Burke, Mitchell (1070 detail records)

177,773.10 $172,822.38 564.00 535.80

$172,822.38

$5,358,000

Summary for Provider = 050000387 — Plul, David (772 detail records)

$108,306.46 $104,958.90 337.00 320.15

$104,958.05

$3,201,500

Summary for Provider = 050000388 — McKlveen, Robert (657 detail records)

$103,806.16 $100,858.90 321.00 304.95

$100,856.90

$3,049,500

App. 332

Summary for Provider = 050000457 — Lillehei, John (496 detail records)

$71,005.65 $68,400.72 264.00 250.80 $88,400.72 $2,508,000

Summary for Provider = 050000467 — Blomberg, Richard (440 detail records)

$88,675.82 $85,452.12 273.00 258.35 $85,462.12 $2,593,500

Summary for Provider = 050000478 — Engwell, Richard (248 detail records)

$4,908.24 $4,887.92 43.00 40.85 $4,687.92 $408,500

Summary for Provider = 053810046 — Northwest Anesthesia, PA (6120 detail records)

$572,431.28 $509,247.90 1,853.00 1,760.35 $589,247.98 $17,603,500

Summary for “FAC” = NIFA (32410 detail records)

$5,459,396.96 $5,537,991.55 21,464.00 20,390.80 $5,537,991.51 $203,908,000

App. 333

In The United States District Court

District of Minnesota

MANA, et al. vs. Unity Hospital, et al.

Deposition of Patrict Donohue-1/8/98

Donohue, Patrick V01 01/08/98

* + a

[27] A It’s @ bulletin that we issued to anesthesia

providers in 1989.

Q I believe this was the earliest of the provider

bulletins that you produced in connection with response to

the subpoena, is that correct, earliest in time?

A It could be, yes.

Q Could you direct your attention to the second page

of the exhibit, I guess it’s page 3 of the document?

A (Examining document.)

Q Was the document responsive to the subpoena

because of the material at the top of the page 3 beginning

when an anesthesiologist and an anesthetist are both

involved in a single procedure?

MR. STONE: Object to the form of the question.

A The document was produced because it was

considered to be communications that we had with provid-

ers about anesthesia and that was one of the things called

for in the subpoena.

Q Okay. Then could you identify Exhibit 1027 for me

which also came from your files?

A It’s a Medicare newsletter that was issued in

August of 1991.

App. 334

Q And I have a few questions about the bottom part

of the second page, Anesthesiologist and CRNA - Single

Service. [28] Could you take a moment to review that

paragraph?

A (Examining document.)

Q Let me know when youre ready.

A All right.

Q Can you tell me what the background is to the

publication of this paragraph, how this set of CPT codes

came about?

A We had been advised by anesthetist providers as I

recall that Blue Shield had come up with a list of proce-

dure codes that they would assume medical necessity for

both the anesthetist and the anesthesiologist’s involve-

ment in the request was that we would agree to the same

list and we did and then published it.

Q So these are procedure codes on which Travelers

considered and would reimburse for medically necessary

CRNA services in addition to the anesthesiologist’s ser-

vice?

A That’s correct.

Q And that would be on cases where there was no

concurrent case? Correct?

A That’s also correct.

Q All right. Did Travelers ever issue any instruc-

tions to providers as to — let me start over. Am I correct

that there are two modifiers under which CRNAs could

bill, one for medically directed services and one for [29]

nonmedically directed services?

App. 335

A That’s correct.

Q Did Travelers ever issue any instruction as to

which modifier CRNAs were to use in billing for these

medical necessity cases?

A No.

Q Was it your understanding that the services would

be billed using the medically directed modifier?

A That’s correct.

Q And am I also correct that Travelers would reim-

burse at two different rates for CRNA services, a medically

directed rate and a nonmedically directed rate?

A That’s correct.

Q And what reimbursement rate were CRNA ser-

vices on medical necessity cases reimbursed?

A Idon’t recall what it was at that time.

Q Has it changed over time?

A Yes.

Q So at one time it was the nonmedically directed

and at one time it was the medically directed rate?

A Im sorry. I misunderstood the original question I

think.

Q Okay. Let’s go back. Medicare reimburses for

CRNA services at one of two rates, medically directed or

nonmedically directed? Is that correct?

* * *

App. 336

[145] A. Yes.

Q What was that?

A An 11 county area that encompassed the south-

eastern corner of the state, Twin City and Rochester areas.

Q When did your territory expand?

A March Ist of 1996.

Q It went from the 11 county area to the entire

state?

A Correct.

Q You in effect took over the carrier duties that Blue

Cross/Blue Shield had been performing?

A For the Part B side of Medicare, yes.

Q How many anesthesia providers were there in the

11 county territory that you had?

A Idon’t know.

Q Do you have any estimate?

A Ireally have no idea.

Q@ Do you have any idea how many anesthesia

providers are in the State of Minnesota?

A No.

Q Despite the appearance of this deposition, your job

encompasses more than dealing with anesthesia billing?

Right?

A Most of the time, yes.

x BY

App. 337

Q Can you rank for us the relative complexity of

Medicare billing regulations for anesthesia compared to

Medicare [146] regulations for billing in other medical

specialties?

MR. STONE: Object to the form of the question.

Anesthesia would be at the top.

Why is that?

It’s more complex than the other areas.

Oo &- H& PK

And why is it more complex than the other areas?

A Because the whole pricing and allowable charge

concepts are different than for other medical services.

Q Can you give us a general summary of why they’re

different? What are the other medical services’ charge

based on?

A For example, another physician service, say a visit

or a physical examination is identified to us by a proce-

dure code and we have an allowance in our system for that

procedure code. It’s as simple as that. With regard to

anesthesia, there is a basic value for every anesthesia

procedure but with regard to the specific procedure there’s

a time element that is also reflected in the allowance and

the charge and then the distinction between a personally

performed service and a medically directed service both for

the anesthesiologist and for the anesthetist.

Q Do any of the other medical services have concepts

such as personal performance versus medically directed?

* * *

App. 338

[SEAL]

FOR IMMEDIATE RELEASE

CIV

THURSDAY, FEBRUARY 24, 2000

(202) 514-2007

WWW.USDOJ.GOV

TDD (202) 514-1888

JUSTICE DEPARTMENT RECOVERS OVER

$3 BILLION IN WHISTLEBLOWERS FALSE

CLAIMS ACT AWARDS AND SETTLEMENTS

WASHINGTON, D.C. — More than $3 billion has been

recovered in civil fraud cases brought under the whistle-

blower provisions of the False Claims Act, since the law

was amended in 1986, the Justice Department announced

today. Almost half of the recoveries have come in the last

two and a half years. “It took us 12 years — to the end of

fiscal year 1998 — to recover $2 billion in civil fraud cases

brought under the whistleblower provisions,” said Acting

Assistant Attorney General David W. Ogden for the Civil

Division. “We have reached the $3 billion mark just 16

months later.” Ogden stressed that besides providing

monetary recovery, the whistleblower suits have also had a

deterrent effect among recipients of federal funds. The

False Claims statute allows private persons, known as

“relators,” to file suit on behalf of the United States

alleging that false or fraudulent claims have been submit-

ted to the government. Persons who file qui tam suits may

recover from 15 to 25 percent of the settlement or judg-

ment if the federal government intervenes in the case, or

App. 339

up to 30 percent if they pursue it on their own. More than

3000 such suits have been filed since 1986. The number of

qui tam suits filed has risen from 33 per year in the year

after 1986 to 483 in the last fiscal year. The whistleblower

provisions have yielded recoveries of more than $3.5

billion to date: $3.3 billion in cases that the Department of

Justice pursued and $211 million in cases litigated by

whistleblowers after the Department of Justice declined to

pursue the case. The Department of Justice has paid

whistleblowers more than $550 million as their statutory

shares, with additional awards pending. “The False

Claims Act’s gui tam provisions have provided a remark-

able return for the taxpayers of this country,” said Ogden.

“The Department of Justice’s recovery of more than $3.3

billion through whistleblower suits demonstrates that the

public-private partnership encouraged by the statute

works and is an effective tool in our continuing fight

against the fraudulent use of public funds.” Among the

most recent recoveries are:

e National Medical Care, now also known as

Fresenius Medical Care, North America, the

largest provider of dialysis services in the

United States, agreed to pay $375 million to

resolve qui tam allegations that the company

submitted false claims for laboratory tests

and conspired to pay illegal kickbacks. This is

the largest civil recovery in a health care

fraud case.

¢ Beverly Enterprises Inc., the nation’s largest

operator of nursing homes, agreed to pay

$170 million to settle allegations that it de-

frauded Medicare by fabricating records t

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