Articles Posted in US Court of Appeals for the Third Circuit

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Nita and her husband, Kirtish, pled guilty to defrauding Medicare (18 U.S.C. 1347), based on having forged physicians’ signatures on diagnostic reports and having conducted diagnostic testing without the required physician supervision. The government then brought this civil action for the same fraudulent schemes against Nita, Nita’s healthcare company (Heart Solution), Kirtish, and Kirtish’s healthcare company (Biosound). The district court granted the government summary judgment, relying on the convictions and plea colloquies in the criminal case, essentially concluding that Nita had admitted to all elements and issues relevant to her civil liability. Nita and Heart Solution appealed. The Third Circuit affirmed Nita’s liability under the False Claims Act, 31 U.S.C. 3729(a)(1)(A) and for common law fraud but vacated findings that Heart Solution is estopped from contesting liability and damages for all claims and Nita is estopped from contesting liability and damages for the remaining common law claims. The district court failed to dissect the issues that were determined in the criminal case from those that were not, lumping together Nita and Heart Solution, even though Heart Solution was not involved in the criminal case. It also failed to disaggregate claims Medicare paid to Nita and Heart Solution from those paid to Kirtish and Biosound. The plea colloquy did not clarify ownership interests in the companies; who, specifically, made certain misrepresentations; nor whether one company was paid the entire amount or whether the payments were divided between the companies. View "Doe v. Heart Solution PC" on Justia Law

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LifeWatch is one of the two largest sellers of telemetry monitors, a type of outpatient cardiac monitoring devices used to diagnose and treat heart arrhythmias, which may signal or lead to more serious medical complications. An arrhythmia can be without noticeable symptoms. Other outpatient cardiac monitors also record the electrical activity of a patient’s heart to catch any instance of an arrhythmia but they vary in price, method of data capture, and mechanism by which the data are transmitted for diagnosis. LifeWatch sued the Blue Cross Blue Shield Association and five of its member insurance plan administrators under the Sherman Act, 15 U.S.C. 1, claiming they impermissibly conspired to deny coverage of telemetry monitors as “not medically necessary” or “investigational,” although the medical community, other insurers, and independent arbiters viewed it as befitting the standard of care. The Third Circuit reversed the dismissal of the complaint. LifeWatch plausibly stated a claim and has antitrust standing. That so many sophisticated third parties allegedly view telemetry monitors as medically necessary or meeting the standard of care undercuts Blue Cross’s theory that nearly three dozen Plans independently made the opposite determination for 10 consecutive years. Read in the light most favorable to LifeWatch, the complaint alleges competition among all outpatient cardiac monitors such that they are plausibly within the same product market. LifeWatch has alleged actual anticompetitive effects in the relevant market. View "Lifewatch Services Inc. v. Highmark, Inc." on Justia Law

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From 1996-2011 Pennsylvania claimed the costs of a training program, the Pennsylvania Restraint Reduction Initiative, “to train long-term care facility staff in the use of alternative measures to physical and chemical restraints,” as administrative costs under its Medicaid program, 42 U.S.C. 1396b(a)(7) . The Centers for Medicare & Medicaid Services (CMS) reimbursed Pennsylvania for about $3 million. After an audit, CMS sought a return of the money on the ground that funds spent on training programs are not reimbursable as administrative costs under Medicaid. CMS relied heavily on a 1994 State Medicaid Director Letter. The Appeals Board, district court, and Third Circuit rejected the state’s arguments that the 1994 Letter was an invalid substantive rule, that the Letter’s text does not exclude the training costs from reimbursement, that the Letter imposed an ambiguous condition on a federal grant, that the Appeals Board abused its discretion in denying discovery, that the HHS Grants Administration Manual limits the disallowance period to three years, and that the district court should have taken judicial notice of the 2015 CMS Question and Answer document concerning training costs. The court noted CMS could have reimbursed Pennsylvania if Pennsylvania factored the amount into its rate-setting scheme instead of claiming it as administrative costs. View "Commonwealth of Pennsylvania Department of Human Services v. United States" on Justia Law

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Gillispie, an RN, worked for the Medical Center, addressing possible medical errors. In October 2012, a pregnant patient, “E.R.,” went to the Center’s emergency room complaining of pain and vaginal bleeding. After examining E.R., Center personnel discharged her, telling her to “[g]o directly to Uniontown Hospital” to see a gynecologist. The Center had no gynecologist on staff. Center personnel did not transport E.R. Two days later, Cowie, the Center’s CEO, held a meeting to investigate whether E.R.’s discharge violated the Emergency Medical Treatment and Active Labor Act (EMTALA), 42 U.S.C. 1395dd, or triggered reporting requirements. Gillispie contends that she insisted at two meetings that EMTALA required a report, but Cowie instructed the attendees not to report. Pennsylvania Department of Health representatives subsequently investigated a complaint regarding another patient, L.S.; Gillispie stated that Cowie had falsely told L.S.’s family that nurses had been disciplined for L.S.’s treatment. Cowie terminated Gillispie’s employment. Gillispie later reported the Center’s discharge of E.R., then filed suit under EMTALA’s whistleblower protection provision. The Third Circuit affirmed summary judgment in favor of the defendants. Gillispie did not give anyone at the Center any information about E.R.’s discharge that they were not already aware of, so she did not make a report and did not engage in activity protected by EMTALA’s whistleblower provision. Gillispie’s complaint with respect to L.S. have a statutory remedy, so she may not also allege a public policy-based wrongful discharge claim. View "Gillispie v. Regionalcare Hospital Partners, Inc." on Justia Law

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Sports Medicine performed shoulder surgery on “Joshua,” who was covered by a health insurance plan, and charged Joshua for the procedure. Because it did not participate in the insurers’ network, Sports Medicine was not limited to the insurer’s fee schedule and charged Joshua $58,400, submitting a claim in that amount to the insurers on Joshua’s behalf. The claim form indicated that Joshua had “authorize[d] payment of medical benefits.” The insurer processed Joshua’s claim according to its out-of-network cap of $2,633, applying his deductible of $2,000 and his 50% coinsurance of $316, issuing him a reimbursement check for the remaining $316, and informing him that he would still owe Sports Medicine the remaining $58,083. Sports Medicine appealed through the insurers’ internal administrative process and had Joshua sign an “Assignment of Benefits & Ltd. Power of Attorney.” Sports Medicine later sued for violations of the Employee Retirement Income Security Act (ERISA), and breach of contract, citing public policy. The district court dismissed for lack of standing because Joshua’s insurance plan included an anti-assignment clause. The Third Circuit affirmed, holding that the anti-assignment clause is not inconsistent with ERISA and is enforceable. View "American Orthopedic & Sports Medicine v. Independence Blue Cross Blue Shield" on Justia Law

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Little Sisters of the Poor, a Roman Catholic congregation serving the elderly poor of all backgrounds, operates homes for the elderly, all of which adhere to the same religious beliefs. A religious nonprofit corporation that operates a Little Sisters home in Pittsburgh sought to intervene in litigation challenging regulations promulgated under the Patient Protection and Affordable Care Act, 42 U.S.C. 300gg-13(a)(4). That litigation was instituted by the Commonwealth of Pennsylvania, challenging interim final rules, providing for “religious” and “moral “ exemptions to the Act's "contraceptive mandate" for “entities, and individuals, with sincerely held religious beliefs objecting to contraceptive or sterilization coverage,” including “for-profit entities that are not closely-held.” The Third Circuit reversed the denial of their motion. Little Sisters’ interest in the regulations is neither novel nor isolated; it has been involved in Affordable Care Act litigation for years. Little Sisters’ interest in preserving the religious exemption is concrete and capable of definition; the relationships among the organization's various homes indicate a unique interest compared to other religious objectors who might wish to intervene. Those interests are significantly protectable. Little Sisters have demonstrated that they may be “practically disadvantaged by the disposition of the action” and have established that their interests are not adequately represented by the federal government. View "Commonwealth of Pennsylvania v. President United States" on Justia Law

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Shuker underwent a hip replacement surgery that resulted in unexpected complications and brought tort claims against Smith & Nephew, the manufacturer of his hip replacement system. The Medical Device Amendments of 1976, added comprehensive medical device approval processes to the Federal Food, Drug, and Cosmetic Act, prescribing tiers of federal requirements for certain devices corresponding to the device’s inherent risk level. In exchange for compliance with the strictest federal mandates, Congress afforded manufacturers express preemption from state laws imposing different or additional “safety or effectiveness” requirements for those devices, 21 U.S.C. 360k(a)(2). Shuker’s medical device was comprised of multiple components, some of which are from “Class III” medical devices subject to federal requirements and some of which are from medical devices that carry a different class designation and are not subject to those requirements. The Third Circuit affirmed a determination that Shuker’s negligence, strict liability, and breach of implied warranty claims are expressly preempted. The court reversed the dismissal of other claims. Shuker adequately pleaded non-preempted claims based on Smith & Nephew’s alleged off-label promotion in violation of federal law and loss of consortium, and jurisdictional discovery is warranted with respect to personal jurisdiction over one of the defendants. View "Shuker v. Smith & Nephew PLC" on Justia Law

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Caremark is a pharmacy benefit manager. In 2006, Caremark employees identified approximately 4,500 Prescription Drug Events (PPDEs) under Medicare Part D that had been authorized for payment by Caremark, but not yet submitted to the Centers for Medicare and Medicaid Services (CMS), due to the lack of a compatible Prescriber ID. Caremark then used a dummy Prescriber ID for those PDEs and programmed that dummy Prescriber ID into its system. Thereafter, when any claim with a missing or incorrectly formatted Prescriber ID was processed, the system would default to the dummy, which allowed Caremark to submit for payment PDEs without trigging CMS error codes. Spay, a pharmacy auditor, discovered the use of “dummy” Prescriber IDs while auditing a Caremark client. That client dropped all issues identified in the audit, collected no recovery from Caremark, and did not pay Spay. Spay filed a qui tam lawsuit, asserting violations of the False Claims Act because the inaccurate PDEs were used to support reimbursement requests. The government declined to intervene. The court granted Caremark summary judgment, finding that Caremark had established sufficient government knowledge to preclude finding the required element of scienter, noting that several courts have adopted the government knowledge inference doctrine. The Third Circuit affirmed, declining to adopt that doctrine but stating that the misrepresentations were not material to the government’s decision to pay the underlying claims. View "Spay v. CVS Caremark Corp" on Justia Law