CARROLL v. HACKENSACK MERIDIAN PASCACK VALLEY MEDICAL CENTER

CourtDistrict Court, D. New Jersey
DecidedDecember 14, 2023
Docket2:21-cv-18104
StatusUnknown

This text of CARROLL v. HACKENSACK MERIDIAN PASCACK VALLEY MEDICAL CENTER (CARROLL v. HACKENSACK MERIDIAN PASCACK VALLEY MEDICAL CENTER) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CARROLL v. HACKENSACK MERIDIAN PASCACK VALLEY MEDICAL CENTER, (D.N.J. 2023).

Opinion

lo NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

UNITED STATES OF AMERICA, ex rel. JENNIFER CARROLL, Civ. Action No. 21-18104 (SDW) (ESK) Plaintiff-Relator, OPINION v.

HACKENSACK MERIDIAN PASCACK VALLEY MEDICAL CENTER, et al., December 14, 2023 Defendants. WIGENTON, District Judge. Before this Court are three separate motions to dismiss (D.E. 58–60 (the “Motions”)) Relator Jennifer Carroll’s (“Relator”) Second Amended Complaint (D.E. 54 (“SAC”)) for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6). The Motions were filed by three sets of Defendants: (1) Hackensack Meridian Pascack Valley Medical Center (“Pascack Valley”), Hackensack Meridian Mountainside Medical Center (“Mountainside”), and Ardent Health Services, LLC (“Ardent”); (2) Kayal Medical Center Hackensack (“Kayal”); and (3) Hackensack Meridian Health Network (“HMHN”) and Hackensack University Medical Center (“HUMC,” together with Pascack Valley, Mountainside, Ardent, Kayal, and HMHN, “Defendants”). (D.E. 58–60.) Subject matter jurisdiction is proper pursuant to 28 U.S.C. §§ 1331 and 1345 and 31 U.S.C. § 3730(b). Venue is proper pursuant to 28 U.S.C. § 1391 and 31 U.S.C. § 3732(a). This opinion is issued without oral argument pursuant to Rule 78. For the reasons discussed below, Defendants’ Motion is GRANTED and the SAC is DISMISSED. I. BACKGROUND AND PROCEDURAL HISTORY This case arises from Relator’s allegations that Defendants, healthcare organizations that provide medical care to thousands of Medicare patients throughout New Jersey, engaged in a conspiracy to submit to the Government fraudulent claims for payment or approval. (D.E. 54 ¶¶ 2,

48–96.) Relator, a registered nurse, was the Director of Case Management for Pascack Valley from in or around February 2020 until February 2021. (Id. ¶¶ 48, 115, 125.) In that role, Relator reviewed hospital admissions regarding, among other procedures, total knee and hip replacements. (Id. ¶ 51.) She alleges that, during her time at Pascack Valley, she witnessed or was otherwise made aware of a conspiracy by which Defendants defrauded Medicare. (Id. ¶¶ 8–10.) A. Medicare Medicare provides basic health insurance for individuals who are 65 or older, disabled, or have end-stage renal disease. (Id. ¶¶ 31.) It pays a significant portion of every claim made on behalf of beneficiaries; however, it does not pay “for any expenses incurred for items or services . . . [that] are not reasonable and necessary for the diagnosis or treatment of illness or injury or to

improve the functioning of a malformed body member.” (Id. ¶¶ 30, 32 (alterations in original).) As relevant here, Medicare reimburses providers for inpatient services only if “a physician certifies that such services are required to be given on an inpatient basis for such individual’s medical treatment, or that inpatient diagnostic study is medically required and such services are necessary for such purposes.” (Id. ¶ 33.) The decision to admit a patient on an inpatient—rather than outpatient—basis requires a

formal admission order from a doctor “who is knowledgeable about the patient’s hospital course, medical plan of care, and current condition.” (Id. ¶ 37.) Inpatient admission “is generally appropriate for payment under Medicare Part A when the admitting physician expects the patient to require hospital care that crosses two midnights” (the “two-midnight rule”). (Id. ¶¶ 38–39.) Medicare also allows doctors to admit patients for inpatient treatment if that decision is supported by the medical record, which must contain “[t]he factors that [led] to a particular clinical expectation.” (Id.)

Certain medical procedures, however, must be performed on an inpatient basis to qualify for Medicare coverage. (See, e.g., id. ¶¶ 64–65.) Until recently, that list of procedures (the “IPO list”) included total knee arthroplasty (“TKA”) and total hip arthroplasty (“THA”). The Department of Health and Human Services, Centers for Medicare and Medicaid Services (“CMS”)—the agency that administers Medicare (id. ¶ 34)—removed TKA and THA from the IPO list on January 1, 2018, and January 1, 2020, respectively. Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment System and Quality

Reporting Programs, 82 Fed. Reg. 52356, 52522–25 (Nov. 13, 2017); Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs, 84 Fed. Reg. 61142, 61352–55 (Nov. 12, 2019). B. The Scheme Relator alleges that, after CMS removed the TKA and THA procedures from the IPO list, Defendants flouted Medicare’s requirements regarding inpatient admissions for those procedures.

Specifically, instead of conducting a case-by-case medical necessity review, Defendants’ doctors allegedly pre-programmed SmartPhrase—a tool that allowed doctors to auto-populate information in clinical notes—to automatically input phrases that would falsely justify an inpatient stay regardless of the patient’s medical condition. (Id. ¶¶ 58–66, 77.) Relator asserts that the main culprit was Kayal, a medical center that “occupie[s] the fourth floor of a wing of [Pascack Valley] and generate[s] tens of millions of dollars in revenues for Defendants.” (Id. ¶¶ 16, 73–76.) According to the SAC, the other Defendants were well aware of Kayal’s practices and either affirmatively or tacitly approved thereof. (Id. ¶¶ 76, 78–80.) Indeed, when Relator and others tried to report these alleged misrepresentations, their concerns were either ignored or brushed aside. (Id. ¶¶ 76, 78–81, 95.) Eventually, Relator was terminated following an

investigation into her violating HIPAA. (Id. ¶ 110.) Relator contends that she did not violate HIPAA; instead, she insists, the investigation was a cover for Pascack Valley’s actual motivation for terminating her—her investigating and reporting about the scheme. (Id. ¶¶ 111, 116, 119–20, 125–26.) C. Procedural History On October 5, 2021, Relator filed this qui tam action under seal and on behalf of the United States. (D.E. 1.) On August 10, 2022, the Government declined to intervene and requested that

the matter be unsealed, which this Court did on August 16, 2022. (D.E. 6–7.) Relator filed an amended complaint against all Defendants on November 9, 2022. (D.E. 8 (“FAC”).) On January 17, 2023, Defendants filed three motions to dismiss the FAC. (D.E. 33–35.) Following several extensions, Relator opposed the motions to dismiss on March 30, 2023. (D.E. 48.) One week later, Relator filed a cross motion for leave to file a second amended complaint, which was granted on April 10, 2023. (D.E. 52–53.) The next day, Relator filed the SAC wherein she alleges several claims under the False Claims Act, 31 U.S.C. §§ 3729(a)(1), 3730(h), and a claim under New Jersey’s Conscientious Employee Protection Act (“CEPA”), N.J. Stat. Ann. § 34:19-1, et seq. (D.E. 54.) Defendants filed the instant Motions on May 9, 2023, and the parties timely completed

briefing. (D.E. 58–60; D.E. 62–65.) II.

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CARROLL v. HACKENSACK MERIDIAN PASCACK VALLEY MEDICAL CENTER, Counsel Stack Legal Research, https://law.counselstack.com/opinion/carroll-v-hackensack-meridian-pascack-valley-medical-center-njd-2023.