Drummond v. BestCare: An “Open-and-Shut Case” of Medicare Fraud – Part Two

The Posture of the Case When It Came to the Fifth Circuit Court of Appeals

We left off Part One discussing the fact that the United States government, after intervening in the case, filed two partial motions for summary judgment against BestCare and Maghareh.  The motions sought $10 million and $30 million, respectively, grounded in violation of the False Claims Act arising out of Medicare Fraud.

The district court, after sitting on the second motion for four years, finally granted both summary judgment motions.  It then entered a final judgment in the amount of $30 million (given that the first motion’s request for $10 million was subsumed in the second motion’s request for $30 million).

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Not surprisingly, BestCare and Maghareh appealed to the Fifth Circuit.  It was thus the Fifth Circuit’s job to determine whether there were any factual disputes that would save BestCare and Maghareh from facing that $30 million liability.

The Court Knocked Back Each of BestCare’s Arguments

BestCare and Maghareh put forward a number of different arguments in order to claim that BestCare’s billing practices were lawful.  They also claimed that, even if their actions were unlawful, they did not possess the requisite state of mind to commit those Medicare fraud violations.  Let us look at each of their arguments in turn.

First, the defendants asserted that it was the wording of the Medicare Claims Processing Manual that was to blame.  Specifically, the defendants asserted that the guidance in the manual (used by businesses to navigate the Medicare billing system) was so poor that they thought they were billing lawfully.  The court was unpersuaded.

The court cleverly noted:

The byzantine laws governing Medicare reimbursement have been aptly described as a “labyrinth.” . . .  Even the most complicated labyrinth has an outer boundary, however.  And BestCare’s machinations fell well outside of it.

The court then held that it is, of course, the statutory text that matters, not a Medicare Claims Processing Manual.  Moreover, a claims manual has no binding legal effect. Even so, the Court opined the Manual made it clear that “miles not actually traveled by the laboratory technician” could not be reimbursed.  What is rather appalling is that the defendants, though relying on the Manual, omitted two crucial paragraphs from the Manual when making their argument to the court.  The court, however, unearthed those important paragraphs when rejecting the defendants’ argument.

Second, the defendants argued that the calculation of damages was incorrect.  The problem with their argument there, however, was that they only challenged the damages connected to the first motion for summary judgment, not the second.  Thus, because the $30 million award was left unchallenged, the court found that any dispute as to the first motion’s $10 million is moot.

Third, Maghareh argued that even if BestCare is liable, he should not be held personally liable as well.  The court disagreed.  The court recognized that Maghareh:

  • Signed the Medicare enrollment form, promising not to “submit claims with deliberate ignorance or reckless disregard of their truth or falsity;” and
  • Signed every false claim that BestCare submitted.

Finally, Maghareh argued that he did not personally benefit from the fraud.  The court quickly rejected that argument out of hand.  Given the joint and several liability between BestCare and Maghareh, the court found that Maghareh’s argument “would not matter even if it were true.”

In a stark conclusion, the opinion could not have been any clearer in finding the defendants responsible for the millions of dollars of fraud, stating “BestCare’s indisputable violation of the statute makes this an open-and-shut case.” With precision and simplicity, the Court stated:  “BestCare and Maghareh spent years submitting false claims to the Government.  Now they must pay.” Medicare Fraud is a pay and chase situation – in this case, the chase was successful!


 If you have further questions on this or any healthcare subject, please contact the Whistleblower Firm – Nolan Auerbach & White, LLP.  We have the experience and resources to protect Healthcare Fraud whistleblowers.  Contact us online, or by calling 800-372-8304 today.

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