Groat v. Boston Heart Diagnostics Corporation ( 2017 )


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  •                           UNITED STATES DISTRICT COURT
    FOR THE DISTRICT OF COLUMBIA
    ____________________________________
    )
    UNITED STATES OF AMERICA, et al., )
    )
    ex rel. TINA D. GROAT,                )
    )
    Plaintiffs,             )
    )
    v.                            )    Civil Action No. 15-487 (RBW)
    )
    BOSTON HEART DIAGNOSTICS              )
    CORPORATION,                          )
    )
    Defendant.              )
    ____________________________________)
    MEMORANDUM OPINION
    The plaintiff/relator, Tina D. Groat, M.D., initiated this qui tam action against the
    defendant, Boston Heart Diagnostics Corporation (“Boston Heart”), under the federal False
    Claims Act, 31 U.S.C. § 3729 (2012), and various analog state false claims statutes. See
    Relator’s Second Amended Complaint Pursuant to the Federal False Claims Act, 31 U.S.C.
    §§ 3729 et seq. and Pendent State False Claims Acts (“2d Am. Compl.”) ¶ 1. On June 9, 2017,
    the Court granted in part and denied in part Boston Heart’s motion to dismiss the relator’s
    complaint. See United States ex rel. Groat v. Boston Heart Diagnostics Corp., 
    255 F. Supp. 3d 13
    , 17, 32–33 (D.D.C. 2017) (Walton, J.). Currently before the Court is Boston Heart
    Diagnostics Corporation’s Motion for Reconsideration of the Court’s Order on the Motion to
    Dismiss (“Def.’s Mot.”). Upon careful consideration of the parties’ submissions, 1 the Court
    concludes that it must grant in part and deny in part Boston Heart’s motion for reconsideration.
    1
    In addition to the filings already identified, the Court considered the following submissions in reaching its
    decision: (1) the Relator’s Substitu[t]ed Oppos[i]tion to Defendant’s Motion for Reconsideration (“Relator’s
    (continued . . . )
    I.     BACKGROUND
    The Court discussed the factual background and statutory authority pertinent to this case
    in its Memorandum Opinion issued on June 9, 2017, see 
    Groat, 255 F. Supp. 3d at 17
    –20, and
    will not reiterate those facts and authorities again here. In that opinion, the Court declined to
    dismiss the relator’s presentment claim under § 3729(a)(1)(A) and false statements claim under
    § 3729(a)(1)(B), as well as her analog presentment and false statements claims under various
    state false claims act statutes, but dismissed her “reverse false claims” under § 3729(a)(1)(G) and
    the analog state statutes. See 
    id. at 30–33.
    On June 23, 2017, Boston Heart filed its present
    motion, requesting that the Court reconsider its conclusion “that Boston Heart has an obligation
    to establish that the tests for which it seeks government reimbursement are medically necessary,”
    
    id. at 25,
    which “underlies [the Court’s] conclusions with respect to both falsity and knowledge
    as to [the r]elator’s presentment . . . [and] false statements allegations,” Def.’s Mot. at 9 (internal
    citations omitted).
    II.        STANDARD OF REVIEW
    Under Federal Rule of Civil Procedure 54(b), any order or decision that does not
    constitute a final judgment “may be revised at any time before the entry of a judgment
    adjudicating all the claims and all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b).
    Although “district court[s] ha[ve] ‘broad discretion to hear a motion for reconsideration brought
    under Rule 54(b),’” Univ. of Colo. Health at Mem’l Hosp. v. Burwell, 
    164 F. Supp. 3d 56
    , 62
    (D.D.C. 2016) (quoting Isse v. Am. Univ., 
    544 F. Supp. 2d 25
    , 29 (D.D.C. 2008)), district courts
    ( . . . continued )
    Opp’n”); (2) Boston Heart Diagnostics Corporation’s Reply in Support of Its Motion for Reconsideration of the
    Court’s Order on the Motion to Dismiss (“Def.’s Reply”); (3) the Brief of Amicus Curiae American Clinical
    Laboratory Association (“Amicus Br.”); (4) the Relator’s Response to Brief of Amicus Curiae American Clinical
    Laboratory Association (“Relator’s Amicus Resp.”); and (5) the Reply to Relator’s Response to Brief of Amicus
    Curiae American Clinical Laboratory Association (“Amicus Reply”).
    2
    grant motions for reconsideration of interlocutory orders only “as justice requires,” Capitol
    Sprinkler Inspection, Inc. v. Guest Servs., Inc., 
    630 F.3d 217
    , 227 (D.C. Cir. 2011) (quoting
    Greene v. Union Mut. Life Ins. Co. of Am., 
    764 F.2d 19
    , 22–23 (1st Cir. 1985)).
    In deciding whether “justice requires” reversal of a prior interlocutory order, courts
    assess circumstances such as “whether the court ‘patently’ misunderstood the parties, made a
    decision beyond the adversarial issues presented, made an error in failing to consider controlling
    decisions or data, or whether a controlling or significant change in the law has occurred.” In
    Defense of Animals v. Nat’l Insts. of Health, 
    543 F. Supp. 2d 70
    , 75 (D.D.C. 2008) (quoting
    Singh v. George Wash. Univ., 
    383 F. Supp. 2d 99
    , 101 (D.D.C. 2005)); see also Davis v. Joseph
    J. Magnolia, Inc., 
    893 F. Supp. 2d 165
    , 168 (D.D.C. 2012) (“[A] motion for reconsideration is
    discretionary and should not be granted unless the movant presents either newly discovered
    evidence or errors of law or fact that need correction.”). “The burden is on the moving party to
    show that reconsideration is appropriate and that harm or injustice would result if reconsideration
    were denied.” United States ex rel. Westrick v. Second Chance Body Armor, Inc., 
    893 F. Supp. 2d
    258, 268 (D.D.C. 2012) (citing Husayn v. Gates, 
    588 F. Supp. 2d 7
    , 10 (D.D.C. 2008)). And,
    motions for reconsideration are not vehicles for either reasserting arguments previously raised
    and rejected by the court or presenting arguments that should have been raised previously with
    the court. See Estate of Gaither ex rel. Gaither v. District of Columbia, 
    771 F. Supp. 2d 5
    , 10 &
    n.4 (D.D.C. 2011).
    III.    ANALYSIS
    Boston Heart urges the Court to reconsider its conclusion “that Boston Heart has an
    obligation to establish that the tests for which it seeks government reimbursement are medically
    necessary,” 
    Groat, 255 F. Supp. 3d at 25
    , for three reasons, see Def.’s Mot. at 1–2. The Court
    3
    agrees that this conclusion warrants correction to clarify that a laboratory may rely on the
    ordering physician’s determination of medical necessity in the laboratory’s certification to HHS
    on the CMS–1500 form. Nonetheless, the Court concludes that despite its correction of the
    medical necessity ruling, its denial of Boston Heart’s motion to dismiss the relator’s federal and
    state presentment and false statements claims was proper.
    A.     The Court’s Conclusion Regarding Laboratories’ Obligations with Respect to
    Medical Necessity
    1.      HHS Compliance Program Guidance for Clinical Laboratories
    First, Boston Heart argues that the Court’s prior medical necessity conclusion “conflicts
    directly with the longstanding position of the Office of the Inspector General for the Department
    of Health and Human Services . . . that ‘laboratories do not and cannot treat patients or make
    medical necessity determinations.’” 
    Id. at 1
    (quoting Publication of OIG Compliance Program
    Guidance for Clinical Laboratories (“OIG Guidance”), 63 Fed. Reg. 45,076, 45,079 (Aug. 24,
    1998)); see also 
    id. at 3–5
    (discussing the OIG guidance). The relator argues in response that the
    OIG Guidance “firmly establishes a lab[oratory]’s duty to only submit claims for medically
    necessary tests and directly aligns with the CMS Form 1500 requirement for [a] ‘physician or
    supplier’ to certify” the medical necessity of each test ordered. Relator’s Opp’n at 6. Although
    the Court agrees with the relator that a laboratory has a “legal duty to ensure that it is not
    submitting false or incorrect claims to Government . . . payors,” OIG Guidance, 63 Fed. Reg. at
    45,077, it concludes for the reasons set forth below that a laboratory cannot and is not required to
    determine medical necessity, but rather is permitted to rely on the ordering physician’s
    determination that the laboratory tests billed to Medicare are medically necessary.
    The OIG Guidance was issued “to refine and build on the original model guidance plan
    for clinical laboratories,” which was published in 1997 as part of an effort “to engage the private
    4
    health care community in combating fraud and abuse.” OIG Guidance, 63 Fed. Reg. at 45,076.
    This supplemental guidance was “intended to assist clinical laboratories in developing effective
    internal controls that promote adherence to applicable . . . law[s,] . . . [and to] advance the
    prevention of fraud, abuse, and waste in the clinical laboratory industry.” 
    Id. at 45,077.
    The
    OIG Guidance identifies for laboratories “specific areas of potential fraud,” including, as
    relevant to this case, “marketing schemes, [ ] coding issues, . . . and improper claims
    submission.” 
    Id. at 45,078.
    The OIG Guidance section devoted to “Medical Necessity” states, among other things,
    that
    [l]aboratory compliance programs, to be effective, should communicate to
    physicians that claims submitted for services will only be paid if the service is
    covered, reasonable, and necessary for the beneficiary, given his or her clinical
    condition. Laboratories should take all reasonable steps to ensure that [they are]
    not submitting claims for services that are not covered, reasonable and necessary.
    Upon request, a laboratory should be able to produce or obtain from the treating
    physician . . . the documentation to support the medical necessity of the service the
    laboratory has provided and billed to a Federal . . . health care program. We
    recognize that laboratories do not and cannot treat patients or make medical
    necessity determinations. However, there are steps that such facilities can take to
    assure compliance with the applicable statutes, regulations and the requirements of
    Federal . . . health plans.
    
    Id. at 45,079
    (footnote omitted).
    The OIG Guidance recommends various processes a laboratory can implement to ensure
    that laboratories do not submit claims for unnecessary tests. For example, the OIG Guidance
    encourages a laboratory to
    construct [its] requisition form to capture the correct program information as
    required by Federal . . . health care programs and to promote the conscious ordering
    of tests by physicians . . . . The laboratory should construct the requisition form to
    ensure that the physician . . . has made an independent medical necessity decision
    with regard to each test the laboratory will bill. Laboratories should encourage
    physicians . . . to submit diagnosis information for all tests ordered, as
    5
    documentation of the medical necessity of the service. The form should contain a
    statement indicating that Medicare generally does not cover routine screening tests.
    
    Id. It also
    states that
    there are steps laboratories can take to determine whether physicians . . . are being
    encouraged to order medically unnecessary tests. More importantly, if the
    laboratory discovers that it has in some way contributed to the ordering of
    unnecessary tests, the OIG believes the laboratory has a duty to modify its practices,
    as well as notify the physician(s) . . . of its concerns and recommend corrective
    action.
    
    Id. at 45,080.
    Finally, the OIG Guidance notes that
    [l]aboratories cannot alter the physician’s order in any way either increasing or
    decreasing the number of services performed without the express consent of the
    ordering physician . . . . To ensure code accuracy, laboratories should require that
    individuals with technical expertise in laboratory testing review the appropriateness
    of the codes before the claims are submitted. Intentional or knowing upcoding (i.e.,
    the selection of a code to maximize reimbursement when such code is not the most
    appropriate descriptor of the service) could violate the False Claims Act and/or
    other civil laws, and criminal law.
    
    Id. Upon review
    of the OIG Guidance, the Court concludes that it overstated a laboratory’s
    “obligation to establish that the tests for which it seeks government reimbursement are medically
    necessary.” 
    Groat, 255 F. Supp. 3d at 25
    . Although it is true that when a laboratory “submits the
    CMS–1500 form, it certifies that the tests performed were medically necessary,” 
    id. (emphasis added),
    and that it has a role to play to ensure that it does not submit claims for medically
    unnecessary tests, see OIG Guidance, 63 Fed. Reg. at 45,077, the Court is now convinced that a
    laboratory cannot and is not required to determine medical necessity, but rather is permitted to
    rely on the ordering physician’s determination that the laboratory tests billed to Medicare are
    medically necessary. The OIG Guidance makes clear that “laboratories do not and cannot treat
    patients or make medical necessity determinations,” but “should be able to produce or obtain
    from the treating physician . . . the documentation to support the medical necessity of the service
    6
    the laboratory has provided.” 
    Id. at 45,079
    . Moreover, the OIG Guidance, in describing a
    laboratory’s duties to ensure that it does not submit claims for medically unnecessary tests, does
    not include among those duties a laboratory’s obligation to make an independent determination
    of the medical necessity of each test performed and billed. See 
    id. at 45,079–080
    (e.g., stating
    that laboratories should communicate with physicians, maintain documentation to support
    medical necessity, construct requisition forms to promote conscious ordering of tests by
    physicians, and review coding). In the Court’s view, the OIG Guidance would have explicitly
    included that obligation among its recommended compliance processes if it had intended to
    impose such an obligation on laboratories, and to suggest otherwise would entirely contradict
    that explicit language of the OIG Guidance. 2
    2.       HHS Regulation on Clinical Laboratory Recordkeeping
    Second, Boston Heart argues that the federal regulation regarding laboratory
    recordkeeping “also underscore[s] that physicians, and not laboratories, establish the medical
    necessity of patient tests.” 
    Id. at 5;
    see also 
    id. at 5–7
    (discussing the regulation). The Court
    considered this regulation in its prior Memorandum Opinion and ultimately concluded that
    “Boston Heart’s reliance on the Medicare regulation regarding documentation and recordkeeping
    requirements [wa]s unavailing because that provision does not address the entity’s certification
    2
    In its filings submitted in support of its motion to dismiss, Boston Heart had cited the OIG Guidance in support of
    its argument that laboratories are not required to independently verify the medical necessity of tests ordered by
    physicians, but only in its reply brief. See Boston Heart Diagnostics Corporation’s Reply in Support of Its Motion
    to Dismiss Relator’s Second Amended Complaint at 4 & n.5; see also Memorandum of Law in Support of Boston
    Heart Diagnostics Corporation’s Motion to Dismiss Relator’s Second Amended Complaint at iii–vii (not including
    the OIG Guidance in its Table of Authorities). Judges in this District have repeatedly held that arguments may not
    be raised for the first time in a party’s reply. See, e.g., Akinsinde v. Not-For-Profit Hosp. Corp., 
    216 F. Supp. 3d 33
    ,
    41 (D.D.C. 2016) (“The court has no obligation to entertain arguments raised for the first time in a reply brief and
    declines to do so here.”); Wright v. Metro. Life Ins. Co., 
    618 F. Supp. 2d 43
    , 47 n.5 (D.D.C. 2009) (Walton, J.)
    (“Courts ‘highly disfavor[] parties creating new arguments at the reply stage that were not fully briefed during the
    litigation.’” (alteration in original) (quoting Pub. Citizen Health Research Grp. v. Nat’l Insts. of Health, 
    209 F. Supp. 2d
    37, 43 (D.D.C. 2002))).
    7
    of medical necessity on the CMS–1500 form.” 
    Groat, 255 F. Supp. 3d at 26
    (citing 42 C.F.R.
    § 410.32(d)(2)). The Court stated:
    Although Boston Heart is correct that the provision requires both the doctor
    ordering the service and the entity submitting the claim for payment to maintain
    documentation regarding medical necessity, see [42 C.F.R.] § 410.32(d)(2)(i)–(ii),
    the CMS–1500 form requires the entity submitting the claim, be it a
    “physician or supplier,” to certify the medical necessity, CMS–1500 at 2 (emphasis
    added). The regulation simply does not state that only the ordering physician, and
    not the entity submitting the claim, has the obligation to certify the medical
    necessity of the tests at issue when submitting claims for payment. See 42 C.F.R.
    § 410.32(d)(2)–(3). In sum, the regulation, which concerns recordkeeping, has no
    bearing on the certification of medical necessity on the CMS–1500 form.
    
    Id. However, the
    Court did not consider the regulation in the context of the negotiated
    rulemaking that produced it, 3 and which addressed the tension between Medicare’s statutory
    medical necessity requirement, see 42 U.S.C. 1395y(a)(1)(A), and the “special circumstances
    related to laboratories,” see Medicare Program; Negotiated Rulemaking: Coverage and
    Administrative Policies for Clinical Diagnostic Laboratory Services; Final Rule (“Laboratory
    Final Rule”), 66 Fed. Reg. 58,788, 58,801 (Nov. 23, 2001). 4
    3
    “Section 4554(b)(1) of the Balanced Budget Act of 1997 . . . mandate[d the] use of a negotiated rulemaking
    committee to develop national coverage and administrative policies for clinical diagnostic laboratory services
    payable under Medicare Part B . . . [in order] to promote program integrity and national uniformity and simplify
    administrative requirements . . . .” Medicare Program; Negotiated Rulemaking: Coverage and Administrative
    Policies for Clinical Diagnostic Laboratory Services; Proposed Rule, 65 Fed. Reg. 13,082, 13,083 (Mar. 10, 2000)
    (internal quotation marks omitted). Members of the committee included representatives of HHS, the American
    Association of Bioanalysts, the American Association for Clinical Chemistry, the American Association of Retired
    Persons, the American Clinical Laboratory Association, the American College of Physicians—American Society of
    Internal Medicine, the American Health Information Management Association, the American Hospital Association,
    the American Medical Association, the American Medical Group Association, the American Society for Clinical
    Laboratory Science, the American Society of Clinical Pathologists, the American Society for Microbiology, the
    Clinical Laboratory Management Association, the American Society for Clinical Laboratory Science, the College of
    American Pathologists, the Health Industry Manufacturers Association, the Medical Group Management
    Association, and the National Medical Association. 
    Id. at 1
    3,083–084.
    4
    Again, in support of its motion to dismiss, Boston Heart cited the negotiated rulemaking only in its reply brief. See
    Boston Heart Diagnostics Corporation’s Reply in Support of Its Motion to Dismiss Relator’s Second Amended
    Complaint at 4 n.5, 5 n.9; see also Memorandum of Law in Support of Boston Heart Diagnostics Corporation’s
    Motion to Dismiss Relator’s Second Amended Complaint at iii–vii (not including the negotiated rulemaking in its
    Table of Authorities).
    8
    The regulation was promulgated to establish “uniform national coverage and
    administrative policies for clinical diagnostic laboratory services payable under Medicare Part
    B[,] . . . to promote Medicare program integrity and national uniformity[,] and simplify
    administrative requirements for clinical diagnostic laboratory services.” 
    Id. at 58,789.
    The
    negotiated rulemaking explained the division of responsibilities between the ordering physician
    and the laboratory with respect to documentation and recordkeeping requirements as follows:
    [T]he laboratory is responsible for maintaining information it receives from the
    ordering practitioner, and the practitioner[] is responsible for maintaining the
    information in the medical record. [HHS’s] initial request for information is made
    to the entity submitting the claim. That entity should submit whatever
    documentation it has in support of the claim.
    If the documentation provided by the entity submitting the claim does not
    demonstrate that the service is reasonable and necessary, we will take the following
    action: (1) Provide the ordering physician information sufficient to identify the
    claim being reviewed; (2) request from the ordering physician those parts of a
    beneficiary’s medical record that are relevant to the specific claim(s) being
    reviewed; and (3) if the ordering physician does not supply the documentation
    requested, inform the entity submitting the claim(s) that the documentation has not
    been supplied and deny the claim.
    Since the entity submitting the claim will be the entity to experience a payment
    denial if documentation does not support the medical necessity of the claim, we
    agreed laboratories should not be precluded from requesting additional diagnostic
    or other medical information from the ordering provider. In making requests for
    additional information, laboratories must focus their request for additional
    information on material relevant to medical necessity. In addition, documentation
    requests must take into account applicable laws and regulations related to patient
    confidentiality.
    
    Id. at 58,800.
    HHS also noted that the regulation
    does not change the current provisions for liability on claims due to lack of
    information supporting medical necessity. Section 1862(a)(1)(A) of the [Social
    Security] Act provides that, notwithstanding any other provision of the Act,
    payment may not be made for services that are not reasonable and necessary for the
    diagnosis or treatment of illness or injury. Presently, all entities that bill the
    Medicare program are held liable when they bill for services and are not able to
    produce documentation of the medical necessity of the service. Although the
    [Negotiated Rulemaking] Committee discussed at length the special circumstances
    9
    related to laboratories, which frequently do not have direct contact with the patient,
    the Committee recognized that the law does not provide the authority to exempt
    laboratories from the provision related to medical necessity.
    
    Id. at 58,801
    (emphasis added). Finally, HHS stated that it
    do[es] not agree [with some commenters] that the provision related to denial of
    claims for laboratory services when documentation is not provided is unfair.
    Rather, we believe it would be unfair to exempt laboratories from this provision
    while continuing to require it for other providers and suppliers. For example,
    durable medical equipment (DME) suppliers frequently do not have direct contact
    with beneficiaries but are dependent upon physician documentation of medical
    need in order to receive payment.
    
    Id. Upon review
    of HHS’s explanations of the regulation, the Court concludes that HHS’s
    view supports the Court’s conclusion that, although laboratories, as the entity submitting a claim
    for payment, are required by statute to certify the medical necessity of the tests at issue, see 
    id. (“[A]ll entities
    that bill the Medicare program are held liable when they bill for services and are
    not able to produce documentation of the medical necessity of the service.”), neither the
    Medicare statute nor the regulation regarding laboratories require laboratories to independently
    determine the medical necessity of the tests billed. Rather, HHS recognized “the special
    circumstances related to laboratories [because they] frequently do not have direct contact with
    the patient,” 
    id., and, in
    the Court’s view, issued the regulation regarding recordkeeping and
    documentation in an attempt to balance a laboratory’s statutory requirement to certify medical
    necessity with the requirement that the ordering physician determine medical necessity, see 
    id. (comparing laboratories
    to durable medical equipment suppliers, which “are dependent upon
    physician documentation of medical need in order to receive payment” (emphasis added)); see
    also 42 C.F.R. 410.32(a) (noting that “[t]ests not ordered by the physician who is treating the
    10
    beneficiary are not reasonable and necessary”). 5 Therefore, although it is true that “[t]he
    regulation simply does not state that only the ordering physician, and not the entity submitting
    the claim, has the obligation to certify the medical necessity of the tests at issue when submitting
    claims for payment,” 
    Groat, 255 F. Supp. 3d at 26
    (emphasis added), upon review of HHS’s
    explanation at the time it promulgated the regulation, the Court must clarify that even though the
    Medicare statute requires the laboratory to certify the medical necessity of any test for which it
    makes a claim for payment, the laboratory is not required to make an independent determination
    of medical necessity, but rather may rely on the ordering physician’s determination. 6
    3.       Cases Cited by the Court
    Third, Boston Heart argues that the cases the Court cited in support of its conclusion
    regarding the medical necessity determination do not “support[] the proposition that a laboratory
    must independently establish the medical necessity of tests it performs on a physician’s request.”
    Def.’s Mot. at 9; see also 
    id. at 7–9
    (discussing cases). Upon further review of these cases, the
    Court agrees. In its Memorandum Opinion, the Court directly quoted a decision issued by the
    United States District Court for the Central District of California in support of its statement that
    “the regulatory scheme ‘places the burden of establishing the medical necessity of diagnostic
    tests on the entity submitting the claim.’” 
    Groat, 255 F. Supp. 3d at 26
    (quoting Garcia v.
    5
    This view is supported by HHS’s decision to allow laboratories to request additional information relevant to
    medical necessity from the ordering physician. In other words, although a laboratory cannot make a medical
    necessity determination, it is permitted to ask the ordering physician for additional information supporting the
    medical necessity determination. See Laboratory Final Rule, 66 Fed. Reg. at 58,800 (“Since the entity submitting
    the claim will be the entity to experience a payment denial if documentation does not support the medical necessity
    of the claim, we agreed laboratories should not be precluded from requesting additional diagnostic or other medical
    information from the ordering provider.”).
    6
    The relator argues that Boston Heart fails to meet the standard for reconsideration under Rule 54(b). See Relator’s
    Opp’n at 1–4. Because the Court concludes that it must clarify that a laboratory may rely on the ordering
    physician’s determination of medical necessity in the laboratory’s certification to HHS on the CMS–1500 form, 
    see supra
    Part III.A, it also concludes that “justice requires” the Court to amend its prior memorandum opinion, see
    Capitol Sprinkler 
    Inspection, 630 F.3d at 227
    .
    11
    Sebelius, No. CV 10-8820 PA (RZx), 
    2011 WL 5434426
    , at *7 (C.D. Cal. Nov. 8, 2011)). That
    case concerned a medical doctor’s Administrative Procedure Act challenge of HHS’s decision
    “to recoup what the Secretary determined were overpayments billed under [the doctor’s]
    Medicare provider number.” Garcia, 
    2011 WL 5434426
    , at *1. In Garcia, the entity submitting
    the claim was the physician himself, not a clinical laboratory, see 
    id. at *3,
    and therefore, the
    Garcia court’s statement regarding “the burden of establishing the medical necessity of
    diagnostic tests” did not address the issue of whether a laboratory must independently determine
    medical necessity or is permitted to rely on the ordering physician’s determination in its
    certification to HHS.
    This Court also cited to Nephropathology Associates, PLC v. Sebelius, No.
    4:12CV00233JLH, 
    2013 WL 3285685
    , at *4 (E.D. Ark. June 27, 2013), for the proposition that
    “the burden remains on the entity submitting the claim to demonstrate that the services at issue
    were reasonable and necessary.” 
    Groat, 255 F. Supp. 3d at 26
    (quoting Nephropathology
    Assocs., 
    2013 WL 3285685
    , at *4). In that case, a clinical laboratory appealed HHS’s denial of
    payment for renal pathology services. See Nephropathology Assocs., 
    2013 WL 3285685
    , at *1.
    The Nephropathology court’s statement that “the burden remains on the entity submitting the
    claim to demonstrate that the services at issue were reasonable and necessary” was in response to
    the laboratory’s interpretation of 42 C.F.R. § 410.32(d) “to mean that [it] does not have to submit
    documentation of a physician’s order unless and until [CMS] requests such documentation,” 
    id. at *4,
    and therefore, like Garcia, does not speak directly to the issue of whether a laboratory must
    independently determine medical necessity or is permitted to rely on the ordering physician’s
    determination in its certification to HHS.
    12
    Finally, the Court also cited to four other federal circuit and district court cases for the
    proposition that (1) laboratories may challenge HHS’s denial of payment to them for testing
    services rendered based upon the determination that such tests were not medically necessary, see
    
    Groat, 255 F. Supp. 3d at 26
    (first citing KGV Easy Leasing Corp. v. Sebelius, No. 09-56393,
    
    2011 WL 490990
    , at *1 (9th Cir. Feb. 14, 2011); then citing Strand Analytical Labs., LLC v.
    Burwell, No. 1:13-cv-00645-LJM-DKL, 
    2015 WL 4603258
    , at *1 (S.D. Ind. July 30, 2015)); and
    (2) laboratories may be sued under the False Claims Act “for allegedly submitting claims for
    medically unnecessary tests,” 
    Groat, 255 F. Supp. 3d at 26
    (first citing United States ex rel.
    Merena v. SmithKline Beecham Corp., 
    205 F.3d 97
    , 98 (3d Cir. 2000); then citing United States
    ex rel. Lutz v. Berkeley Heartlab, Inc., 
    225 F. Supp. 3d 487
    , 495–97, 513–14 (D.S.C. 2016)).
    Again, the CMS–1500 form requires laboratories, as the entity submitting the claim for payment,
    to certify medical necessity, see Health Insurance Claim Form (“CMS–1500”) at 2, available
    at https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS1500.pdf (last
    visited December 6, 2017), and laboratories are allowed to challenge payment denials, but they
    are not prohibited from relying on the ordering physician’s determination of medical necessity.
    Moreover, as will be discussed in further detail below, see infra Part III.B, laboratories may be
    held liable under the False Claims Act. However, like Garcia and Nephropathology, none of
    these four cases specifically states whether a laboratory must independently determine medical
    necessity or is permitted to rely on the ordering physician’s determination in its certification to
    HHS.
    B.     The Relator’s Allegations Regarding Boston Heart’s Falsity and Knowledge
    In its Memorandum Opinion, the Court concluded that the relator’s Second Amended
    Complaint sufficiently alleged that Boston Heart submitted claims that were expressly legally
    13
    false. See 
    Groat, 255 F. Supp. 3d at 23
    (“The Second Amended Complaint makes clear that the
    relator is alleging that Boston Heart’s claims were ‘legally false’ because, according to the
    relator, Boston Heart certified that the tests it performed were medically necessary even though
    they were not medically necessary for certain populations.”). The Court stated:
    An express false certification occurs when a claimant explicitly represents that he
    or she has complied with a contractual condition, but in fact has not
    complied. . . . Under [ ] an express . . . false certification claim, the plaintiff must
    plead that the defendant knowingly violated a requirement that the defendant knows
    is material to the Government’s payment decision.
    
    Id. (internal citations
    and quotation marks omitted). The Court also stated that “the knowledge
    element of a false claim or false statement action [ ] requires a defendant to have ‘actual
    knowledge of the information’ or to ‘act[ ] in deliberate ignorance . . . [or] reckless disregard of
    the truth or falsity of the information.’” 
    Id. at 29
    (quoting 31 U.S.C. § 3729(b)(1)(A)).
    According to Boston Heart, if the Court agrees that laboratories are not obligated to
    independently determine a test’s medical necessity, the relator has failed to sufficiently allege
    facts demonstrating the falsity and knowledge elements of her federal and state presentment and
    false statements claims, and these claims must be dismissed. See Def.’s Mot. at 9–10; see also
    Def.’s Reply at 5. The Court disagrees.
    Boston Heart does not dispute the Court’s summary of the relator’s allegations regarding
    Boston Heart, namely
    that “Boston Heart encourages providers to order [ ] medically unnecessary
    tests” through marketing materials and test panels on pre-printed test requisition
    forms, and that “General Practitioners and other non-cardiology physicians are
    Boston Heart’s primary target” for its allegedly false marketing statements
    regarding the medical necessity of its tests, and their ability “to predict cardiac
    risk.” Ultimately, the relator met with Boston Heart’s CEO and its Vice President
    of Payer Innovation and Strategy on August 15, 2014, and told them “that their test
    panels included many unnecessary tests.”
    
    Groat, 255 F. Supp. 3d at 19
    –20 (internal citations omitted).
    14
    Even though the Court now clarifies that Boston Heart is not required to independently
    determine the medical necessity of tests ordered by physicians, 
    see supra
    Part III.A, accepting
    the relator’s allegations as true, as it must, see Trudeau v. Fed. Trade Comm’n, 
    456 F.3d 178
    ,
    193 (D.C. Cir. 2006), her allegation that Boston Heart engaged in a scheme to encourage
    non-cardiology physicians to order medically unnecessary tests through a false marketing
    campaign and pre-printed test requisition forms would constitute a knowing violation of its
    “legal duty to ensure that it is not submitting false or incorrect claims to Government . . .
    payors,” OIG Guidance, 63 Fed. Reg. at 45,077; see also 
    id. at 45,079–080
    (noting that
    laboratories should ensure that they do not submit claims for medically unnecessary tests by,
    inter alia, communicating with physicians regarding medical necessity, maintaining
    documentation of medical necessity, constructing requisition forms to promote conscious
    ordering of tests by physicians, and reviewing coding). Therefore, the Court remains convinced
    that the relator has sufficiently alleged facts that satisfy the falsity and knowledge elements of
    her federal and state presentment and false statements claims, and, once again, declines to
    dismiss these claims. See United States ex rel. Schaefer v. Family Med. Ctrs. of South Carolina,
    LLC, No. 3:14-382-MBS, 
    2016 WL 6601017
    , at *3–4 (D.S.C. Nov. 8, 2016) (denying a motion
    to dismiss the United States’ complaint in which it “allege[d] that [the d]efendants created and
    utilized custom disease-oriented panels that included more diagnostic tests than typical for
    screening or routine testing,” noting that “[t]he United States alleges that [the d]efendants
    stressed to the physicians . . . to utilize the laboratory panels designed by [the d]efendants,
    regardless of whether all components of the panel were medically necessary”); Berkeley
    
    Heartlab, 225 F. Supp. 3d at 499
    –500 (declining to dismiss the government’s presentment claim
    against a laboratory because “[t]he complaint describes each of the four alleged schemes in
    15
    detail,” including one scheme to encourage physicians to order medically unnecessary tests, and
    “specifies particular genetic testing that is medically unnecessary for the vast majority of the
    population, yet [was] still included in the panels [the d]efendants offered to physicians”); United
    States ex rel. Bane v. Breathe Easy Pulmonary Servs., Inc., No. 8:06-CV-40-T-24 MAP, 
    2007 WL 4885468
    , at *4, *7 (M.D. Fla. Nov. 30, 2007) (magistrate judge recommendation that
    district judge deny a laboratory’s and an oxygen provider’s motion to dismiss the relator’s
    complaint alleging a scheme to bill Medicare for additional, unnecessary oxygen testing in
    violation of the False Claims Act), adopted in relevant part, 
    2008 WL 343158
    (M.D. Fla. Feb. 5,
    2008); United States ex rel. Downy v. Corning, Inc., 
    118 F. Supp. 2d 1160
    , 1172 (D.N.M. 2000)
    (denying defendant laboratories’ motion to dismiss a complaint in which the relator alleged that
    the laboratories, “by using deceptive test order forms and by disseminating deceptive
    information concerning the necessity of performing both [of] the . . . tests [at issue], [the
    laboratories] induced physicians to order many medically unnecessary tests and then charged the
    costs of those tests to the government”), abrogated on other grounds by United States ex rel.
    Sikkenga v. Regence BlueCross BlueShield of Utah, 
    472 F.3d 702
    (10th Cir. 2006); see also
    United States v. Neifert-White Co., 
    390 U.S. 228
    , 232–33 (1968) (“[The False Claims Act is]
    intended to reach all types of fraud, without qualification, that might result in financial loss to the
    Government. . . . [T]he Act is broadly phrased to reach any person who makes or causes to be
    made ‘any claim upon or against’ the United States . . . . [T]he Court has consistently refused to
    accept a rigid, restrictive reading [of the Act] . . . . This remedial statute reaches beyond ‘claims’
    which might be legally enforced, to all fraudulent attempts to cause the Government to pay out
    sums of money.”).
    16
    IV.     CONCLUSION
    In summary, although the Court is persuaded that it overstated the obligations of
    laboratories with respect to making medical necessity determinations, it still remains convinced
    that laboratories have a legal duty to ensure that they do not submit claims for medically
    unnecessary tests. In this case, the relator has sufficiently alleged that Boston Heart submitted
    false claims by engaging in a scheme that encouraged non-cardiology physicians to order
    medically unnecessary tests, and then billing the Government for those tests. See 2d Am.
    Compl.”) ¶¶ 6, 19–22, 52, 94, 127, 132. Accordingly, for the foregoing reasons, the Court grants
    in part and denies in part Boston Heart’s motion for reconsideration. Specifically, the Court
    amends its June 9, 2017 Memorandum Opinion, United States ex rel. Groat v. Boston Heart
    Diagnostics Corp., 
    255 F. Supp. 3d 13
    (D.D.C. 2017) (Walton, J.), to clarify that a laboratory
    may rely on the ordering physician’s determination of medical necessity, but denies Boston
    Heart’s request to dismiss the remaining claims in this case.
    SO ORDERED this 11th day of December, 2017.
    REGGIE B. WALTON
    United States District Judge
    17