October Jury Trial in EDNY False Claims Act Case
August 18, 2014
False Claims Act cases do not often go to trial, so they are noteworthy when they do. EDNY Judge John Gleeson has scheduled an FCA jury trial in October, United States ex rel. Ryan v. Lederman. Earlier this year, the Court granted summary judgment to the government in part and scheduled the remaining issues for trial.
Dr. Gilbert Lederman was Director of Radiation Oncology at Staten Island University Hospital (“SIUH”), where he performed various radiological procedures, usually for cancer treatment. One such treatment was stereotactic radiosurgery, a form of radiation therapy that focuses high-power energy on a small area of the body. Elizabeth Ryan filed a qui tam action in 2004, alleging that Lederman and SIUH had improperly billed the federal government for health services under Medicare, because stereotactic radiosurgery was not “reasonable and necessary.” The government intervened in 2008. SIUH had also been a defendant in the case, but settled all claims against it later that year for $25 million.
Under local medical review policies (“LMRP”), now called “local coverage determinations,” treatment of below the neck diseases such as lung carcinoma with stereotactic radiosurgery was considered “investigational.” The government alleged, and Lederman did not dispute, that he had submitted claims for at least 300 below-the-neck stereotactic radiosurgeries.
Summary Judgment Establishes Claims Were False; Knowledge Issue Set For Trial
In its summary judgment decision, the Court first determined that the claims were “false” on two grounds. Lederman had submitted false claims because the LMRPs excluded coverage for stereotactic surgery performed below the neck. Lederman argued that the LMPRs provided only guidance, but the Court held that local coverage determinations are mandatory for the areas they cover. In addition, the Court held that Lederman had misrepresented the procedures performed, because they were not coded as below-the-neck procedures.
The False Claims Act requires a knowing submission of a false claim, however, so the Court next looked to whether Lederman had acted “knowingly.” The Court found the government’s case persuasive, but not sufficient for summary judgment, necessitating a trial on that issue.
With respect to common law claims of payment based on mistake of fact and unjust enrichment, however, there is no knowledge element, so the Court granted summary judgment to the government on those claims.
The Court scheduled a trial on the issues of: (1) whether Lederman acted with a culpable mental state for FCA liability, and (2) the amount of damages on the government’s common law claims, and possibly also the FCA claims.
Court Finds Jury Trial Appropriate, Bifurcates Liability and Damages
Recently, Judge Gleeson addressed two procedural issues in advance of trial, Lederman’s request for a jury trial and the bifurcation of liability and damages.
The relator’s complaint contained a jury demand, but the government’s complaint-in-intervention did not. Lederman did not demand a jury in answering the government’s complaint. The Court held that he could rely on the relator’s jury demand, rejecting the government’s argument that, once it intervened, the original complaint ceased to operate and it could not be bound by the relator’s jury demand.
Earlier this month, the Court decided that it would bifurcate the trial, trying first the issue of Ledermen’s mental state for FCA liability, and then the issue of damages on the common law claims and, if necessary, on the FCA claims. The jury trial is scheduled for October 20.