Health Care Practice and Doctor Agree to Pay Over $6.73 Million to Settle False Claims Act Case

By the Constantine Cannon Whistleblower Team

The United States Department of Justice (DOJ) recently announced that a California-based health care practice and a doctor have agreed to pay $6.73 million to settle allegations of violating the False Claims Act.[1]  The DOJ alleged that the practice, called Feliciano Serrano, M.D., Inc. d/b/a Serrano Kidney & Vascular Access Center, and Dr. Serrano submitted or caused to be submitted false claims for medically unnecessary vascular procedures for 20 Medicare beneficiaries.[2]

What Was the Alleged Scheme?

The DOJ identified two categories of allegedly false claims for unreasonable and unnecessary procedures that were not reimbursable by Medicare or Medicaid.[3]

The first category involved allegations that “Dr. Serrano performed medically unnecessary venograms [imaging], angioplasties [procedure to open arteries], and stent procedures [procedure to open arteries] on 18 patients, purportedly to treat stenosis [narrowing] in their dialysis segments.”[4]  With respect to this first category, the DOJ alleged in particular that (i) Dr. Serrano “routine[ly]” scheduled dialysis access interventions “without waiting for symptoms or complications to present” and “repeated procedures on patients every few days or weeks despite the procedures not being effective nor resulting in any clinical benefit”; (ii) despite certain patients presenting with “unrelated symptoms such as cough, anxiety, or cat scratch, and had no complaints about dialysis access,” they “received a dialysis access intervention at the visit or received one soon after”; and (iii) a Medicare patient “received approximately 42 stents in the dialysis segment between 2016 and 2023, including during a period when Dr. Serrano informed the patient he did not need dialysis.”[5]

The second category involved allegations that “Dr. Serrano performed medically unnecessary angiograms [imaging], angioplasties [procedure to open arteries], and stent [procedure to open arteries] and atherectomy [procedure to remove plaque from arteries] procedures on 17 patients, purportedly to treat peripheral artery disease stenosis [narrowing] in their legs . . . .”[6]  With respect to this second category, the DOJ alleged in particular that (i) Dr. Serrano performed interventions on patients even though they “suffered from only minor symptoms . . . and . . . ultrasounds showed only mild or no stenosis”; (ii) he performed interventions without first trying “conservative therapy measures” like exercise or medication; (iii) despite “patients complain[ing] of pain only in one leg, he performed procedures on both legs” and “repeated procedures on both legs every few months”; (iv) he “told patients that if they did not receive the procedure, their legs would need to be amputated, when, in fact, there [wa]s little risk of amputation”; and (v) a patient “received approximately 16 atherectomies in his legs between 2019 and 2023.”[7]

How Much Did Dr. Serrano Agree to Pay?

To settle the allegations in the case, Dr. Serrano agreed to pay a total of $6,735,604.68 plus interest to the United States and the State of California.[8]

Remarks on the Case

DOJ Assistant Attorney General Brett A. Shumate commented: “Physicians should not be performing and billing for unnecessary and excessive medical interventions.  False documentation of symptoms compromises the integrity of our federal health care programs and the well-being of beneficiaries.  Physicians who place their own profit over patient needs will be held accountable.”[9]

Constantine Cannon partner Dan Vitelli shared: “Health care fraud takes many forms, but one of the most common patterns involves allegations that a doctor or a health care practice has submitted claims to Medicare or Medicaid for unreasonable or medically unnecessary procedures.  The government takes these types of False Claims Act claims very seriously.  In addition to alleging financial harm to government programs, these types of claims often involve allegations that the medically unnecessary procedures risk harming patients as well.  In these types of cases, whistleblowers can provide particularly valuable information to help enforcement efforts.”

Two More Things to Note

There are two more notable aspects of this case.  First, as in many cases involving health care fraud, this lawsuit was initiated by a whistleblower.  Under the qui tam (or whistleblower) provisions of the False Claims Act, private parties (called relators) may file lawsuits on behalf of the government and receive a portion of the monetary recovery.  In this case, the relator, which will receive approximately $976,000 as its share of the federal recovery, was not an insider.[10]  Rather, the relator is a company called Lincoln Analytics, Inc., which “uses data and investigation to detect health care fraud.”[11]  We are seeing more and more individuals and entities analyzing data to present potential False Claims Act cases.  Indeed, as we previously addressed in a recent post, the DOJ recently announced a new initiative for data miner whistleblowers helping to detect fraud against the government.

Second, before the settlement was announced, the defendants moved to dismiss the Amended Complaint.[12]  There, the defendants argued that the Public Disclosure Bar of the False Claims Act precluded the claim.  To support their position, the defendants argued that the allegations in the Amended Complaint arose “from ‘publicly available Medicare data,’” that the relator was “a data-analytics company deriving its ‘personal knowledge’ from ‘analysis of claims data,’” and that the relator was not an “Original Source” under the statute.[13]  Not only did the relator oppose the defendants’ argument,[14] but the DOJ did as well.[15]  Pursuant to 31 U.S.C. § 3730(e)(4)(A) of the False Claims Act, the DOJ notified the court that the government opposed the dismissal of the relator’s Amended Complaint on the basis of the public disclosure bar.[16]  The DOJ stated, “if the United States objects, as it does here, the Court may not dismiss the [False Claims Act] action on the ground of a prior public disclosure.  . . .  Accordingly, Defendants’ motion to dismiss should be denied insofar as it relies on the public disclosure bar.”[17]  A notice of settlement was filed shortly thereafter.[18]

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[1] See https://www.justice.gov/opa/pr/vascular-practice-and-physician-agree-pay-more-673m-settle-false-claims-act-allegations (press release).

[2] See id.

[3] See https://www.justice.gov/opa/media/1439676/dl (Settlement Agreement) ¶ D.

[4] Id. ¶ D(i).

[5] Id.

[6] Id. ¶ D(ii).

[7] Id.

[8] Id. § 1.

[9] https://www.justice.gov/opa/pr/vascular-practice-and-physician-agree-pay-more-673m-settle-false-claims-act-allegations (press release).

[10] Id.

[11] United States v. Dr. Feliciano Serrano, No. 2:23-cv-4178 (C.D. Cal.), ECF No. 50 (Am. Compl.) ¶ 6.

[12] United States v. Dr. Feliciano Serrano, No. 2:23-cv-4178 (C.D. Cal.), ECF No. 54 (Mot. to Dismiss).

[13] Id. at 3-5.

[14] United States v. Dr. Feliciano Serrano, No. 2:23-cv-4178 (C.D. Cal.), ECF No. 63 (Relator’s Opp’n to Mot. to Dismiss).

[15] United States v. Dr. Feliciano Serrano, No. 2:23-cv-4178 (C.D. Cal.), ECF No. 61 (DOJ’s Opp’n to Mot. to Dismiss).

[16] Id. at 1-2.

[17] Id. at 2.

[18] United States v. Dr. Feliciano Serrano, No. 2:23-cv-4178 (C.D. Cal.), ECF No. 66 (Notice of Settlement).

Tagged in: Healthcare Fraud, Lack of Medical Necessity, Medicare,