JENSEN v. GENESIS LABORATORY MANAGEMENT, LLC

CourtDistrict Court, D. New Jersey
DecidedFebruary 26, 2025
Docket3:20-cv-15121
StatusUnknown

This text of JENSEN v. GENESIS LABORATORY MANAGEMENT, LLC (JENSEN v. GENESIS LABORATORY MANAGEMENT, LLC) 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
JENSEN v. GENESIS LABORATORY MANAGEMENT, LLC, (D.N.J. 2025).

Opinion

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

MARLA JENSEN AND AMANDA MONTEFINESE ex rel. UNITED STATES OF AMERICA, and THE STATES OF CALIFORNIA, FLORIDA, ILLINOIS, NEW Civil Action No. 20-15121 (GC) (TJB) JERSEY, NEW YORK, RHODE ISLAND,

TEXAS, MARYLAND, CONNECTICUT, and THE COMMONWEALTHS OF MASSACHUSETTS AND VIRGINIA, OPINION

Plaintiffs,

v.

GENESIS LABORATORY, et al.,

Defendants.

CASTNER, District Judge

THIS MATTER comes before the Court upon Defendants Genesis Laboratory Management, LLC’s (Genesis) and Metropolitan Healthcare Billing, LLC’s (Metropolitan) Motion to Dismiss Plaintiffs’/Relators’1 Second Amended Complaint (SAC) (ECF No. 32) pursuant to Federal Rule of Civil Procedure (Rule) 12(b)(6). (ECF No. 44.) Relators opposed (ECF Nos. 46-472), and Defendants replied (ECF No. 48). The Court held oral argument on

1 Marla Jensen and Amanda Montefinese, as Relators, bring this civil action on behalf of the United States of America, the States of California, Florida, Illinois, New Jersey, New York, Rhode Island, Texas, Maryland, Connecticut, and the Commonwealths of Massachusetts and Virginia. (ECF No. 32.) See United States v. Janssen Biotech, Inc., 576 F. Supp. 3d 212, 223 (D.N.J. 2021) (“A private plaintiff (or relator) may bring a civil action on behalf of the United States to enforce the [False Claims Act] and may receive a share of any recovery resulting from the lawsuit.”)

2 Plaintiffs filed the same response twice on the Court’s docket. (See ECF No. 46-47.) The first response was filed under seal. (ECF No. 46.) February 13, 2025. (ECF No. 53.) After careful consideration of the parties’ submissions and arguments, and for the reasons set forth below, and other good cause shown, Defendants’ Motion to Dismiss is GRANTED. I. BACKGROUND3 Relators filed this qui tam action against Defendants for allegedly (1) submitting false

claims to federal and state health care programs for “medically unnecessary” services and (2) waiving copayments and other cost sharing required by those programs in violation of the Anti- Kickback statute, 42 U.S.C. § 1320a-7b(b). (See generally ECF No. 32.) A. Relevant Statutes The Court begins by reviewing the relevant statutes in this case to provide context for Relators’ allegations in the SAC. 1. Medicare The present dispute arises in the context of the Medicare and Medicaid payment systems. (See generally id.) “Medicare is a federal health insurance program for individuals with disabilities

and the elderly,” United States ex rel. Simpson v. Bayer Corp., 376 F. Supp. 3d 392, 397 (D.N.J. 2019), and is administered by the Centers for Medicare and Medicaid Services (CMS), Landau v. Lucasti, 680 F. Supp. 2d 659, 661 (D.N.J. 2010). “Medicare Part A covers inpatient hospital services and items used during inpatient stays.” Simpson, 376 F. Supp. 3d at 397 (citing 42 U.S.C. § 1395c). Medicare Part B “is a voluntary, federally subsidized health insurance program that covers medical expenses . . . not covered under Part A of the program.” Am. Ambulance Serv. of

3 On a motion to dismiss under Rule 12(b)(6), the Court must accept all facts as true, but courts “are not bound to accept as true a legal conclusion couched as a factual allegation.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citation and quotations omitted). Pa., Inc. v. Sullivan, 911 F.2d 901, 903 (3d Cir. 1994) (citing 42 U.S.C. § 1395j). Part B includes medical expenses for laboratory diagnostic testing. See 42 C.F.R. § 410.32 (2016)). a. Reimbursements for Laboratory Testing under Medicare Under Medicare Part B, entities, like Defendants, can submit claims for reimbursement of services provided by physicians. Id. § 410.32(d). The Medicare regulations require “the physician

. . . who orders the service [to] maintain documentation of medical necessity in the beneficiary’s medical record.” Id. § 410.32(d)(2)(i). Additionally, “the entity submitting the claim must maintain . . . [t]he documentation that it receives from the ordering physician or nonphysician practitioner,” and must ensure that the documentation that the entity “submitted with the claim accurately reflects the information it received from the ordering physician or nonphysician practitioner.” Id. at § 410.32(d)(2)(ii). Importantly, “no payment may be made under [Medicare] part A or part B 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.” 42 U.S.C. § 1395y(a)(1)(A); 42 C.F.R. § 410.32(d)(3)(ii). Laboratory

tests “that are performed in the absence of signs, symptoms, complaints, personal history of disease, or injury are not covered except when there is a statutory provision that explicitly covers tests for screening.” See Medicare Claims Processing Manual: Chapter 16 - Laboratory Services (“Processing Manual”) § 120.1 (issued Jan. 4, 2024). 4 Entities seeking reimbursement for services provided to Medicare patients are required to submit a CMS-1500 form, which details the precise services provided. United States v. Andover

4 “The Court may take judicial notice of a ‘public record[.]’” Calabria Ristorante, Inc. v. Ruggiero Seafood, Inc., 706 F. Supp. 3d 489, 502 n.7 (D.N.J. 2023) (quoting Doe v. Princeton Univ., 30 F.4th 335, 342 (3d Cir. 2022)). Additionally, the SAC cites to the Processing Manuel. (See, e.g., ECF No. 32 ¶¶ 24, 27.) Subacute & Rehab Servs. One, Inc., Civ No. 12-03319, 2019 WL 4686963, at *2 n.8 (D.N.J. Sept. 26, 2019); United States ex rel. Groat v. Boston Heart Diagnostics Corp., 255 F. Supp. 3d 13, 18 (D.D.C. 2017) (Groat I) (citing United States ex rel. Hobbs v. MedQuest Assocs., Inc., 711 F.3d 707, 711 (6th Cir. 2013)). (See ECF No. 32 ¶¶ 35-36.) When a laboratory submits a CMS-1500 form, a laboratory “is permitted to rely on the ordering physician’s determination that the

laboratory tests billed to Medicare are medically necessary.” United States ex rel. Groat v. Boston Heart Diagnostics Corp., 296 F. Supp. 3d 155, 160 (D.D.C. 2017) (Groat II) (reconsideration of Groat I); Hobbs, 711 F.3d at 711 (“The CMS-1500 form requires the provider to ‘certify that the services listed . . . were medically indicated and necessary to the health of [the] patient and were personally furnished by [the physician] or [the physician’s] employee under [the physician’s] personal direction.’”). b. Fee Schedule for Laboratory Testing under Medicare Of relevance to the present matter is the Protecting Access to Medicare Act of 2014 (PAMA), Pub. L. No. 113-93 § 216, which added provisions to the Social Security Act, 42 U.S.C.

§ 1305 et seq., related to the payment and coverage of clinical laboratory testing. Processing Manual § 20.

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