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United States ex rel. Polukoff v. St. Mark's Hospital

United States District Court, D. Utah

January 19, 2017

UNITED STATES OF AMERICA, ex rel. GERALD POLUKOFF, Plaintiff/Relator,
v.
ST. MARK'S HOSPITAL; INTERMOUNTAIN HEALTHCARE, INC.; INTERMOUNTAIN MEDICAL CENTER; SHERMAN SORENSEN; and SORENSEN CARDIOVASCULAR GROUP; Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING MOTIONS TO DISMISS

          Jill N. Parrish United States District Court Judge

         Before the court are three motions to dismiss brought by (1) Intermountain Healthcare, Inc. and Intermountain Medical Center (collectively, IHC) [Docket 168]; (2) Doctor Sherman Sorensen and the Sorensen Cardiovascular Group (collectively, Dr. Sorensen) [Docket 172]; and (3) St. Mark's Hospital [Docket 190]. The court GRANTS the motions and dismisses the complaint with prejudice.

         BACKGROUND

         The relator in this lawsuit, Doctor Gerald Polukoff, alleges in his complaint that Doctor Sherman Sorenson performed unnecessary medical procedures and then fraudulently billed the federal government for some of these procedures. Dr. Polukoff also alleges that two hospitals, IHC and St. Mark's, fraudulently billed the government for costs associated with these unnecessary procedures.

         The medical procedure at the heart of this case is a patent foramen ovale (PFO) closure. The foramen ovale is a small opening in the wall separating the two upper chambers of the heart found in a fetus as it develops in the womb. In about 75% of the population, the opening closes soon after birth. In the other 25% of the population, the opening never closes. Except in rare cases, this condition is asymptomatic. But an adult with a PFO has an increased risk of suffering a stroke because blood clots that would otherwise have lodged in the lungs during pulmonary circulation may instead leak through the PFO, enter the systemic circulatory pathway, and lodge in the brain. A PFO may be closed through a percutaneous surgical procedure.

         Opinions regarding the use of a PFO closure to prevent strokes have varied over the past decade. In 2006, the American Heart Association/American Stroke Association (AHA/ASA) issued guidelines regarding the use of a PFO closure to decrease the odds of a stroke. These guidelines stated that “PFO closure may be considered for patients with recurring cryptogenic stroke despite taking optimal medical therapy.” [Docket 90, ¶ 83]. In 2011, the AHA/ASA updated its recommendation, noting that “insufficient data exists to make a recommendation about PFO closure in patients with first stroke and PFO.” [Docket 90, ¶ 84] ¶ 2014, the AHA/ASA updated its recommendations again, noting that for “patients with a cryptogenic ischemic stroke or TIA and PFO without evidence for deep vein thrombosis (DVT) available data do not support a benefit for PFO closure.” [Docket 90, ¶ 85]

         Medicare has not issued a National Coverage Determination (NCD) for PFO closures. [Docket 90, ¶ 91]. Thus Medicare has not taken an official position on when it will or will not pay for this procedure. Healthcare providers, however, must submit a certification with any request for payment from Medicare stating that “the services shown on this form were medically indicated and necessary for the health of the patient.” [Docket 90, ¶ 56] Furthermore, 42 U.S.C. § 1395y(a) provides that “no payment may be made . . . for any expenses incurred for items or services . . . which . . . are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” Dr. Sorensen performed PFO closures from December 2002 through December 2011. [Docket 90, ¶ 2]. He performed these procedures with much greater frequency than other physicians throughout the country. [Docket 90, ¶¶ 3, 93]. Part of the reason that Dr. Sorensen performed more PFO closures than other doctors is that he believed that it was best for the patient not to wait until he or she suffered one or two strokes before performing the procedure. [Docket 90, ¶¶ 123, 145]. Thus, Dr. Sorensen would perform PFO closures as a preventative measure for patients who had not yet suffered a stroke, but who had an elevated risk of a stroke. [Docket 90, ¶¶ 123, 145]. Dr. Sorensen also performed PFO closures to treat chronic migraines. [Docket 90, ¶¶ 137, 144].

         On March 30, 2011, IHC adopted internal guidelines for PFO closures. [Docket 90, ¶ 87]. These guidelines stated that a PFO closure may be considered for “patients with a single well-documented significant stroke or systemic emboli in a high risk patient who has been comprehensively evaluated for alternative cause of embolic stroke.” [Docket 90, ¶ 88]. The IHC guidelines required an independent neurology consult or other tests to confirm either the occurrence of a stroke or an embolism before performing a PFO closure. [Docket 90, ¶ 88]. The guidelines also provided that the procedure may only be performed to treat migraines in a clinical trial setting. [Docket 90, ¶ 90].

         On June 11, 2011, IHC suspended Dr. Sorensen's medical privileges for 14 days because he had performed PFO closures that did not conform to IHC's internal policies. [Docket 90, ¶¶ 115, 117, 119-21]. After returning from his suspension, Dr. Sorensen again performed PFO closures that did not comply with IHC's guidelines. [Docket 90, ¶ 122] In September, 2011, IHC initiated a procedural process to permanently suspend Dr. Sorensen's medical privileges. IHC and Dr. Sorensen entered into a settlement agreement, but soon thereafter, IHC notified Dr. Sorensen that he was in violation of the agreement. After IHC threatened to suspend him and report him to the National Practitioner Database, Dr. Sorensen resigned from IHC. [Docket 90, ¶ 122]. Thereafter, Dr. Sorensen performed PFO closures exclusively at St. Mark's until he retired in December, 2011.

         Dr. Polukoff began working with Dr. Sorensen's practice on August 17, 2011, shortly before Dr. Sorensen resigned his privileges at IHC. [Docket 90, ¶ 123]. Dr. Polukoff worked with Dr. Sorensen for about four months until Dr. Sorensen retired in December 2011. Dr. Polukoff observed Dr. Sorensen perform PFO closures at St. Mark's, including procedures on patients who had not suffered a prior stroke. Dr. Polukoff avers that Dr. Sorensen falsely stated on medical records that the medical basis for the procedure was a history of strokes. [Docket 90, ¶ 123]. He also claims that Dr. Sorensen made false statements on medical records in an attempt to disguise PFO closures as a different medical procedure, a repair of an atrial septal defect. [Docket 90, ¶ 138].

         While he was employed by Dr. Sorensen, Dr. Polukoff was looking into the possibility of purchasing Dr. Sorensen's practice. As part of this investigation, Dr. Polukoff obtained billing documents and a hard drive containing approximately eight years of billing records for Dr. Sorensen's practice. [Docket 90, ¶ 141]. These billing records included patient names, dates of service, and amounts billed. These records did not include Dr. Sorensen's medical notes. [Docket 90, ¶ 141].

         Dr. Polukoff filed this qui tam lawsuit under the FCA against Sorensen, IHC, St. Mark's, and St. Mark's parent company, HCA, Inc. After investigating the complaint, the government elected not to intervene in this action.

         Dr. Polukoff originally filed his complaint in the Middle District of Tennessee. A court in that district dismissed all claims against HCA, the only party with a presence in that district. Upon dismissing HCA from the suit, the Tennessee district court determined that venue in the Middle District of Tennessee was no longer proper and transferred the case to the District of Utah. In this court, the remaining defendants filed motions to dismiss under Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure.

         ANALYSIS

         All of Dr. Polukoff's claims in this case derive from the FCA, which was enacted during the Civil War to curb fraud against the federal government. See Universal Health Servs., Inc. v. United States, 136 S.Ct. 1989, 1996 (2016). Broadly speaking, liability under the FCA requires a knowing lie to the government in order to receive a payment that it would not have otherwise remitted. See Id. (The FCA's “focus remains on those who present or directly induce the submission of false or fraudulent claims.”). The FCA imposes penalties against any person who (1) “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval”; (2) “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim”; (3) “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government”; or (4) conspires to commit any of these violations. 31 U.S.C. § 3729(a)(1)(A)-(C), (G). The Act permits individuals to sue on behalf of the government to enforce the statute. Id. § 3730(b).

         Dr. Polukoff alleges that Dr. Sorensen violated the FCA by performing medically unnecessary PFO closures and then billing the government for these procedures through Medicare and Medicaid. Dr. Polukoff also claims that IHC and St. Mark's also fraudulently billed the government for hospital costs associated with these procedures.

         The defendants have moved to dismiss the complaint on three grounds. First, IHC argues that this court should dismiss the complaint with prejudice because Dr. Polukoff initially filed this case in the wrong court. Second, all of the defendants assert that the complaint should be dismissed because Dr. Polukoff has not pled his claims with particularity as required by Rule 9(b). And third, all of the defendants contend that Dr. Polukoff has failed to plead an objectively false claim submitted to the government. The court will address each of these arguments in turn.

         I. Forum Shopping

         IHC argues that Dr. Polukoff's complaint should be dismissed with prejudice because his decision to file his complaint in the Central District of Tennessee constituted bad faith forum shopping. This court, however, need not delve into whether Mr. Polukoff acted in good faith or not when he chose to file in Tennessee because IHC's argument misapplies the relevant transfer statute.

         A district court's authority to transfer or dismiss a case for improper venue is found in 28 U.S.C. § 1406(a). Under this statute, “[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.” This statutory provision specifically permits the court in which the complaint was originally filed to decide whether the interests of justice require either dismissal or transfer. If the original court elects to transfer a case, nothing in the statute permits the receiving court to countermand the original court's decision and dismiss the case, much less dismiss the case with prejudice.

         Thus, the decision of whether to transfer or dismiss Mr. Polukoff's case rested with the Tennessee district court. Although IHC could have addressed its argument to that court, this court lacks statutory authority to invalidate the Tennessee court's decision to transfer rather than dismiss this case. Moreover, even if this court had the authority to do so, it would exercise its discretion to accept the transfer rather than dismiss this case with prejudice as IHC requests.

         II. Rule 9(b)

         Rule 9(b) of the Federal Rules of Civil Procedure requires that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Because violations of the FCA constitute a fraud on the government, the heightened pleading requirements of Rule 9(b) apply to actions under the Act. United States ex rel. Sikkenga v. Regence Bluecross Blueshield of Utah, 472 F.3d 702, 726 (10th Cir. 2006). “At a minimum, Rule 9(b) requires ...


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