United States v. Carlisle HMA Inc ( 2009 )

Opinions of the United
2009 Decisions States Court of Appeals
for the Third Circuit
1-21-2009
USA v. Carlisle HMA Inc
Precedential or Non-Precedential: Precedential
Docket No. 07-4616
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PRECEDENTIAL
IN THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 07-4616
UNITED STATES OF AMERICA
ex rel. TED D. KOSENSKE, M.D.
v.
CARLISLE HMA, INC.; HEALTH
MANAGEMENT ASSOCIATES, INC.
Ted D. Kosenske, M.D.
Appellant
On Appeal From the United States District Court
For the Middle District of Pennsylvania
(D.C. Civil Action No. 05-cv-02184)
District Judge: Hon. Christopher C. Conner
Argued October 31, 2008
BEFORE: SLOVITER, STAPLETON and
TASHIMA,* Circuit Judges
(Opinion Filed January 21, 2009)
Gregory M. Simpson (Argued)
Simpson Law Firm, LLC
165 North Main Street
Jonesboro, GA 30236
and
Andrew M. Stone
Stone Law Firm, LLC
1400 Allegheny Building
429 Forbes Avenue
Pittsburgh, PA 15219
Attorneys for Appellant
Ted D. Kosenske
D. Brian Simpson
Office of the U.S. Attorney
220 Federal Building and Courthouse
228 Walnut Street
P.O. Box 11754
Harrisburg, PA 17108
Attorneys for Amicus Curiae United States of America
* Hon. A. Wallace Tashima, Senior United States Circuit
Judge for the Ninth Circuit, sitting by designation.
2
Larry B. Selkowitz (Argued)
James W. Saxon
Stevens & Lee
17 North Second Street – 16th Floor
Harrisburg, PA 17101
Attorneys for Appellees
OPINION OF THE COURT
STAPLETON, Circuit Judge:
Appellant Ted D. Kosenske brought this qui tam action
under the False Claims Act, 31 U.S.C. § 3729, et seq., against
Carlisle HMA, Inc. (“HMA”), and its parent company, Health
Management Associates, Inc. The complaint alleged that they
submitted outpatient hospital claims to the Medicare program
and other federal healthcare programs, falsely certifying that
such claims were in compliance with the Stark Act, 42 U.S.C.
§ 1395nn (“the Act”), and the Anti-Kickback Act, 42 U.S.C. §
1320a-7b. The parties filed cross-motions for summary
judgment. The District Court granted the defendants’ motion
and denied the plaintiff’s motion. This appeal followed.
This appeal presents two principal issues. First, we must
decide whether the exclusive service arrangement between
Kosenske’s former practice, Blue Mountain Anesthesia
Associates, P.C. (“BMAA”), and defendants, in which BMAA
3
provided pain management services at an outpatient HMA
clinic, triggered the restrictions placed by the Stark and Anti-
Kickback Acts on the submissions of claims for services
rendered following “referrals” by a physician having a “financial
relationship” with the service provider. We conclude that the
Stark and Anti-Kickback Acts were implicated. Second, we
must determine if the arrangement between BMAA and HMA
satisfied the personal service exception to the Stark Act and the
substantially identical safe harbor provision of the Anti-
Kickback Act. We conclude that it did not. It follows that
summary judgment was wrongly awarded to HMA.
Accordingly, we will reverse and remand to the District Court
for further proceedings consistent with this opinion. Because
the parties agree that, in the context of this case, the
requirements of the Anti-Kickback Act and its implementary
regulations are indistinguishable from those of the Stark Act,
we refer only to the latter in the following analysis.
I.
BMAA, a group of four physicians that practiced
anesthesiology, engaged in negotiations with Carlisle Hospital
and Health Systems (“CHHS”), culminating in an
Anesthesiology Services Agreement (“the Agreement”) dated
December 31, 1992. Kosenske was a member of that group.
The purpose of the Agreement was to establish an
exclusive service arrangement under which BMAA would
provide all anesthesia services required by the Hospital’s
patients at CHHS’s hospital in Carlisle, Pennsylvania (the
“Hospital”). While no pain management services were being
4
performed by BMAA physicians at the Hospital in 1992, the
Agreement contemplated that such services might be rendered
in the future. The Agreement essentially provided that (1)
BMAA would provide anesthesia coverage for Hospital patients
on a 24/7 hour/day basis; (2) the Hospital would provide at no
charge the space, equipment and supplies reasonably necessary
and economical for BMAA to provide these anesthesiology
services; (3) BMAA would use the personnel, space, equipment
and supplies provided by the Hospital solely for the practice of
anesthesiology and pain management for the Hospital’s patients;
(4) the Hospital would not allow anyone other than BMAA
physicians to provide anesthesia or pain management services
at the Hospital; and (5) BMAA physicians would not practice
anesthesia or pain management at any location other than “the
Hospital and . . . such other facilities and locations as may be
operated by Hospital and Carlisle Hospital & Health Services
(“CHHS”), the entity which owns Hospital.” JA at 2.
It is helpful to note at the outset two limitations on the
obligations of BMAA under the carefully drafted Agreement.
First, as the section of the Agreement we have just quoted
suggests and as the remainder of the Agreement confirms,
“Hospital” refers only to the “Carlisle Hospital located at 246
Parker Street, Carlisle, Pennsylvania.” JA at 1. Thus, the
patients that BMAA committed itself to provide 24/7 hour/day
anesthesia services for were the patients in the existing facility
of the Carlisle Hospital. While it is true that the Agreement
contains a few provisions that contemplated the possibility of
BMAA services being performed elsewhere, those provisions
only confirm that BMAA’s commitment under this Agreement
to provide services was limited to that facility. Section 7B, for
5
example, provides as follows:
In the event that Hospital or CHHS
obtains, opens, or operates another facility or
location at which anesthesiology or pain
management services are required or offered,
Hospital and CHHS shall offer BMAA the
opportunity to provide exclusive anesthesiology
and pain management services at such new
facility or location under the same terms and
conditions as provided in this agreement, to the
fullest extent that the Hospital and/or CHHS is
able to contract with BMAA to provide such
services on the same terms and conditions as set
forth herein. Should Hospital and/or CHHS be
unable, for any lawful reason, to enter into a
contract with BMAA to provide such services on
the same terms and conditions as set forth herein,
then Hospital and/or CHHS shall offer BMAA the
first opportunity to provide exclusive
anesthesiology and pain management services at
such new facility or location on whatever terms
Hospital and/or CHHS and BMAA may negotiate
and, in the event that the parties are not able to
negotiate an agreement for the provision of such
exclusive services by BMAA, BMAA shall have
the right of first refusal for any proposal or
contract entered, offered, or made by Hospital
and/or CHHS with any other person or entity to
provide anesthesiology or pain management
services at such new facility. Hospital and/or
6
CHHS shall not enter into any agreement with any
other provider without first offering to BMAA the
opportunity and right to provide such exclusive
services at such facility or location on identical
terms offered to or negotiated with such other
provider.
JA at 8-9 (emphasis added).
Thus, understandably, BMAA was not committing itself
to provide continuous 24/7 service at any new facility that the
Hospital or CHHS might choose to open in the future. Rather,
it insisted that if and when that happened they would either have
to “offer BMAA the opportunity to provide exclusive
anesthesiology and pain management services” in the new
facility under the same terms and conditions or would have to
provide BMAA with an opportunity to exercise a right of first
refusal. In short, if BMAA were going to undertake the
obligation of providing service beyond the patients of the then
current facility, a new contract would be required.
Second, while BMAA committed itself to satisfying all
of the anesthesiology needs of the patients at the Hospital, it did
not similarly commit itself to provide pain management services.
Not surprisingly, given that no pain management services were
being provided when the Agreement was signed, BMAA only
committed itself to “devote such time as necessary to provide
anesthesia services to Hospital patients and provide
anesthesiology consultation to other physicians in the Medical
Staff as needed,” including “reasonable emergency response on
7
a 24 hour a day, 7 day per week basis.” 1 JA at 2, 4.
The Agreement, while using the terms “anesthesiology”
and “pain management” as distinct fields of practice, did not
define these terms. In context, however, anesthesiology is used
in the traditional sense – the practice of administering anesthesia
to patients undergoing a surgical procedure. Accordingly, it is
a hospital- or surgery-center-based practice. The practice of
“pain management,” as commonly understood, involves the
evaluation and management of pain symptoms. It can be, but is
not required to be, hospital-based. This distinction between
anesthesiology and pain management is relevant in the context
of the Stark Act because it bears on the issue of referrals. As the
Department of Health and Human Services (“HHS”) has
recognized, with traditional hospital-based practices like
anesthesiology, “it is typically the hospitals that are in a position
to influence the flow of business to the physicians, rather than
the physicians making referrals to the hospitals.” OIG
Supplemental Compliance Program Guidance for Hospitals, 70
Fed. Reg. 4858, 4867 (Jan. 31, 2005). In such situations, HHS
is primarily concerned with any remuneration flowing from
anesthesiologists to the hospital. With respect to a pain
management practice that is not a hospital-based practice, the
1
It is true, as the District Court found, that the mutual
exclusivity provisions, including one contained in the section
entitled “Obligations of BMAA,” restrict its right to practice
both “anesthesiology and pain management” elsewhere, but
those provisions expressly relate only to BMAA’s right to
practice rather than its obligation to do so.
8
concerns are different. Patients typically come to see pain
management physicians for office visits, and the physicians
frequently order tests or procedures at a hospital, lab, or other
facility. Thus, in pain management, a physician in an outpatient
facility is in a position to generate substantial business for a
hospital. See id. at 4865 (noting that “[p]hysicians are the
primary referral source for hospitals”). Therefore, HHS’s
concern would be with remuneration flowing from the hospital
to the physicians in order to induce the physicians to provide
business for the hospital.
Approximately fifteen months after signing the 1992
Agreement, Kosenske and a Hospital nurse began administering
pain management services, in addition to traditional anesthesia,
to Hospital patients. Because there was no dedicated space for
pain management services, Kosenske saw these patients in space
used for other hospital purposes.
In 1998, the Hospital built a new, stand-alone facility,
containing an outpatient ambulatory surgery center and a pain
clinic (“the Pain Clinic”), which was located about three miles
away from the Hospital. From the day of its opening, BMAA
provided pain management services to patients in the Pain
Clinic, and the Hospital did not charge BMAA rent for the space
and equipment, or a fee for the support personnel it provided to
BMAA at the Pain Clinic. BMAA provided a physician to see
patients in the Pain Clinic, and this physician when serving there
did not have other anesthesiology duties at the Hospital. As
with the anesthesia services, BMAA physicians submitted
claims to Medicare for the professional services performed
during these visits, and the Hospital submitted claims for the
9
facility and technical component of the visits. No one other than
BMAA provided pain management services at the Pain Clinic.
However, the parties did not amend the 1992 Agreement or
enter into a new agreement.
In June 2001, HMA purchased the Hospital from CHHS,
as an asset purchase, and renamed it Carlisle Regional Medical
Center. The 1992 Agreement was not assigned to HMA, but
both HMA and BMAA acted as if the Agreement were still in
effect at the Hospital. We will assume, without deciding, that
HMA was CHHS’s successor under the applicable law.
II.
We review the District Court’s grant of summary
judgment de novo. DIRECTV Inc. v. Seijas, 508 F.3d 123, 125
(3d Cir. 2007) (citing CAT Internet Servs. Inc. v. Providence
Wash. Ins. Co., 333 F.3d 138, 141 (3d Cir. 2003)). 2 We apply
the same standard as the District Court in determining whether
summary judgment was appropriate. Congregation Kol Ami v.
Abington Twp., 309 F.3d 120, 130 (3d Cir. 2002). Thus,
summary judgment was proper if, viewing the record in the light
most favorable to the non-moving party and drawing all
inferences in that party’s favor, there is no genuine issue of
2
We have jurisdiction under 28 U.S.C. § 1291, in that this
is an appeal from a final judgment in favor of defendants.
Judgment was entered on November 15, 2007, and Appellant
timely filed a notice of appeal on December 10, 2007.
10
material fact and the moving party is entitled to judgment as a
matter of law. See Abramson v. William Paterson Coll., 260
F.3d 265, 276 (3d Cir. 2001); Fed. R. Civ. P. 56(c).
III.
Section 3729 of the False Claims Act (“FCA”) imposes
liability on any person or entity who:
(1) knowingly presents, or causes to be presented,
to an officer or employee of the United States
Government or a member of the Armed Forces of
the United States a false or fraudulent claim for
payment or approval;
(2) knowingly makes, uses, or causes to be made
or used, a false record or statement to get a false
or fraudulent claim paid or approved by the
Government;
(3) conspires to defraud the Government by
getting a false or fraudulent claim allowed or
paid; . . . .
31 U.S.C. 3729(a)(1)-(3). Falsely certifying compliance with
the Stark or Anti-Kickback Acts in connection with a claim
submitted to a federally funded insurance program is actionable
under the FCA. See United States ex rel. Schmidt v. Zimmer,
Inc., 386 F.3d 235, 243 (3d Cir. 2004) (citing United States ex
rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d
899, 902 (5th Cir. 1997)); United States v. Rogan, 459 F. Supp.
2d 692, 717 (N.D.Ill. 2006).
11
A
Section 1395nn(a)(i) of the Stark Act provides, in
pertinent part:
if a physician (or an immediate family member of
such physician) has a financial relationship with
an entity specified in paragraph (2), then (A) the
physician may not make a referral to the entity for
the furnishing of designated health services for
which payment otherwise may be made under this
subchapter, and (B) the entity may not present or
cause to be presented a claim under this
subchapter or bill to any individual, third party
payor, or other entity for designated health
services furnished pursuant to a referral
prohibited under subparagraph (A).
42 U.S.C. § 1395nn(a)(1). Under the Act, a physician has a
“financial relationship” with an entity if the physician has “an
ownership or investment interest in the entity,” or “a
compensation arrangement” with it. 42 U.S.C. § 1395nn(a)(2).
A “compensation arrangement” consists, with certain exceptions
not here relevant, of “any arrangement involving any
remuneration between a physician . . . and an entity . . . .” 42
U.S.C. § 1395nn(h)(1)(A). “The term ‘remuneration’ includes
any remuneration, directly or indirectly, overtly or covertly, in
cash or in kind.” 42 U.S.C. § 1395nn(h)(1)(B). The Stark Act
defines “referral” as “the request by a physician for the item or
service, including the request by a physician for a consultation
with another physician (and any test or procedure ordered by, or
12
to be performed by (or under the supervision of) that other
physician).” 42 U.S.C. § 1399nn(h)(5)(A). The “oft-stated
goal” of the Act is “to curb overutilization of services by
physicians who could profit by referring patients to facilities in
which they have a financial interest.” See Jo-Ellyn Sakowitz
Klein, The Stark Laws: Conquering Physician Conflicts of
Interest?, 87 G EO. L.J. 499, 511 (1998).
The Act contains exceptions to its broad prohibition,
however, in order to exclude from the prohibition financial
arrangements that exist for reasons independent of referrals. See
2 B ARRY R. F URROW ET AL., H EALTH L AW: P RACTITIONER
T REATISE S ERIES, § 13-9 (2d ed. 2000). One such exception
excludes “personal service arrangements” if:
(i) the arrangement is set out in writing, signed by
the parties, and specifies the services covered by
the arrangement,
(ii) the arrangement covers all of the services to
be provided by the physician (or an immediate
family member of such physician) to the entity,
(iii) the aggregate services contracted for do not
exceed those that are reasonable and necessary for
the legitimate business purposes of the
arrangement,
(iv) the term of the arrangement is for at least 1
year,
(v) the compensation to be paid over the term of
the arrangement is set in advance, does not exceed
fair market value, and except in the case of a
physician incentive plan described in
13
subparagraph (B), is not determined in a manner
that takes into account the volume or value of any
referrals or other business generated between the
parties,
(vi) the services to be performed under the
arrangement do not involve the counseling or
promotion or a business arrangement or other
activity that violates any State or Federal law, and
(vii) the arrangement meets such other
requirements as the Secretary may impose by
regulation as needed to protect against program or
patient abuse.
42 U.S.C. § 1395nn(e)(3)(A).
The Act defines “fair market value” as “the value in arms
length transactions, consistent with the general market value . .
. .” 42 U.S.C. § 1395nn(h)(3). Once the plaintiff or the
government has established proof of each element of a violation
under the Act, the burden shifts to the defendant to establish that
the conduct was protected by an exception. Rogan, 459 F. Supp.
2d at 716.
B
In the course of concluding that HMA was entitled to
summary judgment, the District Court found that BMAA
received numerous benefits as a result of its relationship to
HMA which constituted “remuneration” for purposes of the Act
and established a “compensation arrangement” and “financial
relationship” between BMAA and HMA. The Court further
14
concluded that BMAA physicians had requested services from
the Hospital that constituted referrals and that HMA had
submitted claims to Medicare based on those services. The
Court held, however, that HMA’s undisputed evidence had
established that its arrangement with BMAA at the Pain Clinic
was within the scope of the “personal service” exception of §
1395nn(e)(3)(A).
In the course of concluding that HMA had carried its
burden of demonstrating satisfaction of all elements of the
personal service exception, the District Court tacitly assumed
that the Agreement was applicable to BMAA’s service at the
Pain Clinic and held that it satisfied the “arrangement . . . in
writing” requirement because “all parties intended . . . HMA to
succeed CHHS under the 1992 agreement for purposes of the
Stark Act.” JA at 41. After concluding that the provisions of
the Agreement “adequately address all of the anesthesiology and
pain management services to be rendered by BMAA at the
hospital and the pain management clinic,” JA at 43, it turned to
the issue of whether the Agreement set forth in advance
compensation to be provided for those services, which did not
exceed their fair market value. The Court concluded that this
requirement of the “personal service” exception was satisfied
even though HMA had tendered no evidence regarding the
market value of the space, equipment and staff services provided
to BMAA at the Pain Clinic or of the mutual exclusivity rights
the parties were apparently according each other there. The
Court found such evidence unnecessary because the
consideration provided for in the Agreement was the result of
negotiation between unrelated parties and “[b]y definition”
reflected fair market value. As the Court put it:
15
The mutuality of rights and responsibilities
imposed by the 1992 agreement is compelling
evidence that the parties engaged in a fair-market-
value exchange. . . . By definition, the terms of
the contract reflect the fair market value of the
benefits conferred on each party. Therefore, the
court finds that [the] agreement complies with the
fair market value requirements of the personal
service exception.
JA at 46-47 (emphasis added).
C
We agree with the District Court’s determination that the
arrangement between BMAA and HMA implicates the Stark
Act. BMAA received numerous benefits as a result of its
relationship with HMA, including the exclusive right to provide
all anesthesia and pain management services, and the receipt of
office space, medical equipment and personnel. These benefits
constitute remuneration in-kind from HMA to BMAA, which is
considered a compensation arrangement under the Act and
establishes a financial relationship between BMAA and HMA.
We cannot, however, agree with the District Court that the
arrangement between BMAA and HMA at the Pain Clinic
qualifies for the personal service exception.
The exception recognizes that there can be personal
service arrangements involving referrals that are beneficial and
seeks to take advantage of those benefits while assuring that the
referrals will not result in abuses. The Act does this by insisting
16
on the transparency and verifiability that comes from an express
agreement reduced to writing and signed by the parties which
specifies all of the services to be provided by the physician and
all of the remuneration to be received for those services.
In this case, the only written contract in existence
between the parties is one that did not, and obviously was not
intended to, apply to services at a non-existent facility. It was
negotiated in 1992 in a context wholly different from the one
that existed six years later after the opening of the Pain Clinic.
No pain management services were being provided by BMAA
in 1992, and by 1998 it was providing exclusive pain
management services for a facility devoted solely to such
services. Similarly, with respect to the value to be received by
BMAA for those services, in 1992 no free Hospital space, staff
or facilities were devoted solely to pain management, and the
opening of the Pain Clinic represented a very substantial change.
In this context, it is apparent that there was no written
contract setting forth the relevant arrangement at the Pain Clinic
following its opening. Moreover, even if the 1992 Agreement
could otherwise be read as reflecting the parties’ arrangement at
the Pain Clinic, that Agreement said nothing about much of the
consideration that BMAA was receiving for its services. The
Agreement says nothing whatsoever about the provision of free
office space, equipment and staff necessary to the practice of
pain management, much less about a stand-alone Pain Clinic.
Finally, it is clear that there were no arm’s length
negotiations that could vouch for the fair match of service and
compensation that the whole statutory scheme is designed to
17
assure. The District Court’s determination that such a match
existed cannot be sustained for two reasons. First, as a factual
matter, negotiations in 1992 could not possibly reflect the fair
market value of the consideration given and received more than
six years later under materially different circumstances. Second,
as a legal matter, a negotiated agreement between interested
parties does not “by definition” reflect fair market value. To the
contrary, the Stark Act is predicated on the recognition that,
where one party is in a position to generate business for the
other, negotiated agreements between such parties are often
designed to disguise the payment of non-fair-market-value
compensation.
The Act provides that “[t]he term ‘fair market value’
means the value in arms length transactions, consistent with the
general market value . . .” 42 U.S.C. § 1395nn(h)(3). The
regulations amplify this definition as follows:
Fair market value means the value in arm’s-length
transactions, consistent with the general market
value. “General market value” means the price
that an asset would bring as the result of bona fide
bargaining between well-informed buyers and
sellers who are not otherwise in a position to
generate business for the other party, or the
compensation that would be included in a service
agreement as the result of bona fide bargaining
between well-informed parties to the agreement
who are not otherwise in a position to generate
business for the other party, on the date of
acquisition of the asset or at the time of the
18
service agreement.
42 C.F.R. § 411.351 (emphasis added). As we have explained,
BMAA and HMA are in a position to generate business for each
other.
HMA makes no plausible argument in support of the
District Court’s analysis. Rather, it advances two alternative
rationales for reaching the Court’s ultimate conclusion. We find
no merit in either.
First, HMA insists that there can be no fair market value
issue because BMAA physicians at the Pain Clinic are
compensated for their medical services directly by Medicare and
HMA is compensated for its commitment of facilities directly by
Medicare. The suggestion, as we understand HMA’s brief, is
that Medicare’s evaluation should be accepted as a fair market
evaluation of each. This would not help HMA, however, unless
we were willing to ignore the current arrangement under which
BMAA is receiving the free use of the Pain Clinic facilities and
apparently the exclusive right to practice pain management
there. Given the text of the Act and the concerns which
prompted it, we must decline the invitation to do so.
HMA’s second alternative ground for sustaining the
judgment of the District Court is based on a Medicare regulation
setting forth requirements “for a determination that a facility . .
. has provider-based status.” 42 C.F.R. § 413.65. HMA’s
argument is that the Act is inapplicable to referrals by BMAA
to the Hospital for diagnostic tests and other services because
“patients treated by BMAA physicians [at the Pain Clinic] were
19
de facto patients of the hospital, and, therefore, BMAA did not
actually make any referrals.” JA at 51, n.19. This argument is
founded not on evidence regarding how patients get to BMAA
physicians at the Clinic, but rather upon 42 C.F.R. § 413.65
which sets forth the conditions under which a facility may be
considered a part of the main hospital – rather than a free
standing facility unrelated to the main provider. This regulation
determines whether a facility like the Pain Clinic has sufficient
connections to a hospital so that it can be considered a part
thereof and, for example, can submit claims under the hospital’s
provider number. Under § 413.65, among other things, the
professional staff at the off-site facility must have clinical
privileges at the main provider, medical records must be
integrated into a unified retrieval system, and patients at the off-
site facility who require further care must have full access to all
services of the main provider. 42 C.F.R. § 413.65(d)(2). As we
read § 413.65, it has nothing to do with referrals or the concerns
of the Stark Act.
HMA points to one subsection of 42 C.F.R. § 413.65
relating to the requirement that the clinical services of the
facility and the main provider must be “integrated as evidenced
by the following,” inter alia:
Inpatient and outpatient services of the facility or
organization and the main provider are integrated,
and patients treated at the facility or organization
who require further care have full access to all
services of the main provider and are referred
where appropriate to the corresponding inpatient
or outpatient department or service of the main
20
provider.
42 C.F.R. § 413.65(d)(2)(vi) (emphasis supplied by HMA).
HMA reads this sub-section as depriving physicians at
the facility of any discretion in making referrals of their patients,
i.e., as mandating referrals to the main provider. We believe
HMA reads too much into this provision. While Pain Clinic
patients clearly must have access to all services provided by the
Hospital in order for it to be considered a part thereof, we are
unpersuaded that BMAA physicians at the Clinic have been
deprived of the right to refer their patients in accordance with
their best medical judgment.
The referrals of patients by BMAA physicians at the Pain
Clinic to the Hospital for diagnostic tests and other treatments
comes within the statutory definition of referrals and the
circumstances in which they are made present the same concerns
that motivated the Act. Accordingly, we conclude that that Act
is implicated and that HMA had the burden of demonstrating its
right to an exception, a burden that it failed to carry.
IV
The judgment of the District Court will be reversed, and
this matter will be remanded for further proceedings consistent
with this opinion.3
3
Because the District Court determined that the Stark and
Anti-Kickback Statutes were not violated, it did not determine
21
whether Kosenske satisfied the remaining elements necessary to
establish a prima facie claim under the False Claims Act, 31
U.S.C. § 3729(a), specifically whether HMA knew its
certifications were false because it was in violation of the Stark
and Anti-Kickback Acts. See United States ex rel. Schmidt v.
Zimmer, Inc., 386 F.3d 235, 242 (3d Cir. 2004) (To establish a
prima facie claim under 31 U.S.C. § 3729(a)(1), a plaintiff must
show that: “‘(1) the defendant presented or caused to be
presented to an agent of the United States a claim for payment;
(2) the claim was false or fraudulent; and (3) the defendant
knew the claim was false or fraudulent.’”) (quoting Hutchins v.
Wilentz, Goldman & Spitzer, 253 F.3d 176, 182 (3d Cir. 2001),
cert. denied, 536 U.S. 906 (2002)).
22