United States v. Krizek

111 F.3d 934 (1997)

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Nature of the Case

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Facts

A lower court determined that the Ds knowingly made false claims in violation of the FCA. The Court found that because of a 'seriously deficient' system of recordkeeping Ds 'submitted bills for 45-50 minute psychotherapy sessions … when D could not have spent the requisite time providing services, face-to-face, or otherwise.' On some occasions, D submitted claims for over 21 hours of patient treatment within a 24-hour period. The Court stated that these false statements were not 'mistakes' nor merely negligent conduct. Under the statutory definition of 'knowing' conduct the Court is compelled to conclude that Ds acted with reckless disregard as to the truth or falsity of the submissions. As such, they will be deemed to have violated the False Claims Act. The Court determined that Ds would be liable under the FCA on every day in which claims were submitted in excess of the equivalent of twelve (12) 90844 claims (nine patient-treatment hours) in a single day and where Ds cannot establish that D legitimately devoted the claimed amount of time to patient care on the day in question. The court referred the matter to a Special Master with instructions to investigate the 8,002 challenged CPT codes and, applying the nine-hour presumption, to determine 1) the single damages owed by Ds; 2) the amount of the single damages trebled; 3) the number of false claims submitted by Ds; and 4) the number of false claims multiplied by $5000. It was determined that Ds requested reimbursement for more than nine hours per day of patient treatment on 264 days. Single damages of $47,105.39, which when trebled totaled $ 141,316.17. He then determined to treat each of the 1,149 false code entries as a separate claim, even where several codes were entered on the same HCFA 1500. This produced civil penalties of $ 5,745,000. The Court awarded damages of $ 47,105.38 to the government for unjust enrichment based on the nine-hour presumption. The Court then discarded the 9-hour benchmark and adopted a 24-hour one so that there can be no question as to the falsity of the claims. Claims in excess of twenty-four hours of patient treatment per day had been made eleven times in the six-year period. The Court assessed fines of $10,000 for each of the eleven false claims, which, combined with single damages of $47,105.39, totaled $157,105.39. The Court assessed Special Master's fees in the amount of $11,000. Everybody appealed.