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December 21, 2005.

UNITED STATES OF AMERICA, ex rel HEFNER, Plaintiff/Relator

The opinion of the court was delivered by: DENNIS CAVANAUGH, District Judge


This matter comes before the Court on Defendant Hackensack University Medical Center, Defendant New Jersey Primary Care and Defendant Center for Infectious Diseases individually filed motions for summary judgment. Also before the Court is Plaintiff/Relator Phil Hefner's cross-motion for partial summary judgment on Counts One and Two of the Amended Complaint. No oral argument was heard pursuant to Fed.R.Civ.P. 78. For the following reasons Defendants' motions for summary judgment are granted. Plaintiff's cross-motion for summary judgment is denied.


  Plaintiff/Relator Phil Hefner ("Hefner" or "Relator") brought this qui tam action under the False Claims Act (FCA), 31 U.S.C.A. § 3729-33 (1994, 2001 supp.), against Defendants Hackensack University Medical Center ("HUMC"), Center for Infectious Diseases, P.A. ("CID"), and North Jersey Primary Care Associates, P.A. ("NJPC"). The Complaint was initially filed under seal in the U.S. District Court for the District of Maryland in or about August/September, 2000. On August 22, 2001, this case was transferred to the District Court of New Jersey pursuant to 28 U.S.C. § 1404. Since that time, the parties have filed amended pleadings and engaged in discovery, all of which culminated in the filing of the instant motions.

  In his First Amended Complaint, Hefner alleges that the Defendants (1) submitted false claims under the Medicare program and federal grants, (2) created false medical records in connection with the presentation of claims to Medicare and federal grants, and (3) engaged in a retaliatory dismissal of Relator from his employment.

  HUMC is a university-based medical center in Hackensack, New Jersey. NJPC, also located in Hackensack, is a New Jersey professional service corporation, organized by a licensed physician who is employed by HUMC in an administrative capacity. CID is the private practice of several physicians, including Dr. Steven Sperber, also located in Hackensack. CID was incorporated on March 21, 1997 and its Board of Directors include Dr. Steven Sperber, Dr. Jerome Levine and Dr. Peter Gross. See Gorrell Affidavit, Ex. D., CID Cert. of Incorporation. Sperber testified at his deposition that CID performs the billing and pays the expenses for work performed by Sperber in the CID office. Payments received for Sperber's services rendered on behalf of CID are assigned to CID, and CID does not assign those payments to HUMC. Sperber does not have an office at HUMC. Sperber Dep., 30:5-31:11.

  Pursuant to January 1998 Tenant Space Agreement, CID pays rent to HUMC for space on the hospital campus to be used for medical offices and related purposes. Pursuant to a January 1999 Amended Tenant Space Lease, CID pays rent to HUMC in addition to certain monthly operating expense charges. Additionally, under a certain licensing and leasing agreement, CID pays HUMC an agreed annual amount in consideration for using the support services of certain administrative hospital personnel for the CID physicians' private practice of medicine. Gorrell Affidavit, Ex. C.

  On March 1, 1998, Dr. Sperber entered into an employment agreement with NJPC. Through this agreement, Sperber treats patients at HUMC's Infectious Disease Clinic ("the ID Clinic") not in excess of 10 hours per week. Sperber is paid a fixed hourly rate for those services. The Agreement provides that NJPC shall bill for all services performed by Sperber under the Agreement, and shall be entitled to all payment received for those services. Gorrell Affid., Ex. C; Sperber Dep. 20:15-18, 22:1-4, 40:4-9; Capek Dep., 71:15-18.

  HUMC operates a variety of programs for persons infected with HIV, including hospice programs and medical clinics (HUMC Mov. Brief at 5.) In 1994, HUMC entered into a Grant Agreement with the City of Paterson, Department of Human Resources in accordance with the Ryan White Comprehensive Emergency AIDS Resources Emergency Act of 1990. (CID Mov. Brief at 15). This Grant Agreement was commonly referred to as the Ryan White Grant ("the Grant"). Beginning in 1995, HUMC received funding provided under the Ryan White Grant to provide various health care services to patients infected with HIV in certain clinics and outpatient sites operated by HUMC, such as the ID Clinic. (Id.) The grant was administrated by Nurse Mary Ann Collins ("Nurse Collins"), an HUMC employee. (Id.) Dr. Sperber performed services in the ID clinic pursuant to his employment with NJPC. (Def. HUMC Mov. Brief at 7.) These services were covered under the Ryan White Grant. Id.

  The Grant Agreement provided for an annual payment which was not to exceed an agreed upon amount which varied over the years of its existence and which covered a variety of services (Id.) These services included social work services, home health aids, housing, transportation and other emergency assistance. (Id.) With regard to physician services, the Grant provided for target service figures and estimated costs associated with such services, as opposed to payment being based on a specific amount for each clinic visit. (Id.)

  One of the conditions of the Grant was that it not be used to replace existing financial support for HIV-related services. (Id. at 6.) In the Year 2000 Grant Agreement, section entitled "Maintenance of Effort and Cost Principles", it provided "[f]unds may not be used to provide items or services for which payment has already been made or can reasonably be made a third-party payer, including Medicaid, Medicare, and/or other State or local entitlement programs, prepaid health plans, or private insurance." (Jackson Cert. Ex. 8, 000372).

  Nurse Collins was responsible for preparing monthly reports/invoices of services for which reimbursement was sought from the Grant. (HUMC Mov. Br. at 7.) Each invoice contained itemized categories of allowable services, including the ID Clinic physician services. (Id.) The physician providing services at the Clinic pursuant to the Grant was Dr. Stephen Sperber. (Id.) All of the services provided by Dr. Sperber in the Clinic were covered under the grant. (Id.) Many of the submissions Nurse Collins prepared included the statement "I certify that all of the attached invoices have not been paid, and none of the items have previously [sic] reimbursed or submitted for payment." (Jackson Cert, Ex. 7, Collins Dep at 37:1-22).

  Although the facts are in dispute as to exactly when, it is clear that at some point on or around July 2000, HUMC became aware that the services Dr. Sperber provided to patients in the Clinic were being funded and reimbursed by the Grant, but also billed and reimbursed by Medicare. At his deposition, Dr. Sperber testified he was unaware that HUMC was submitting Medicare claims under his name and thought that the services in question were not being billed. (Jackson Cert., Ex. 9, 60:11-15.) Nurse Collins testified at her deposition that she became aware that Medicare was billed for services that were reimbursed under the grant when she was contacted by Marilyn Capek, the office manager of the CID practice to check if an error had been made in billing for the physicians in the clinic. (Id. at 24:23 to 25:22).

  At his deposition, HUMC Compliance Officer Thomas Flynn described the circumstances surrounding the Medicare submissions. (HUMC Mov. Br. at 9; Flynn Dep. at 58:24 to 60:5). Mr. Flynn stated that at HUMC, the billing process generally involves data entry with the use of an allowance code for internal accounting purposes to create a credit for services that would not be billed. (Id.) Here, Mr. Flynn surmised, the code was not entered in for the services in question, thereby generating a receivable balance and a bill to Medicare. (Id.)

  In July 2000, Relator was assigned by Health Systems Management Network, Inc. ("HSMN"), a consulting firm, to work with the medical staff of HUMC in complying with documentation and billing practices required by federal regulations. (Comp. at ¶ 10.) In the course of his assignment, Hefner met with representatives of each clinical area in order to "set goals and objectives for each service, identify clinical leaders, create access to the medical staff and determine timetables and milestones." (Id. at ¶ 11.) As such, Hefner was granted direct access to HUMC medical staff. (Id.) On July 11, 2000, Hefner met with Marilyn Capek, an employee of CID, to discuss compliance issues. (Id. at ¶ 12.) In the Complaint, Hefner stated that Ms. Capek advised him "the Infectious Disease Section received a number of ongoing federal grants, and that HUMC routinely billed patient services to the government through one or more HUMC grants, and then rebilled these same services to the government again through Medicare." (Id. at ¶ 13.) Also, Relator claims that Ms. Capek stated HUMC billed patient services to a private insurer, and then re-billed these same services to the Government through one or more HUMC federal grants. Id. Furthermore, Plaintiff alleges Ms. Capek stated HUMC's intentional double-billing was ongoing, and that she felt "at risk" should the double billing be discovered by state or federal authorities. (Id. at ¶ 14.) Shortly after this meeting, HSMN terminated the Plaintiff's involvement with HUMC. (Id. at ¶ 16.) On July 17, 2000, Hefner's employment with HSMN was also terminated. (Id.)

  By way of letter dated September 11, 2000, NJPC informed Empire Medicare Services that a number of claims had been submitted to Medicare in error, as the services were already reimbursed through a Ryan White Grant. (See Affidvait of Joseph Gorrell, Ex. G.) NJPC reimbursed Empire Medicare Services in the amount of $5,258.97, in full repayment of the errant claims. Id.


  Summary judgment is granted only if all probative materials of record, viewed with all inferences in favor of the non-moving party, demonstrate that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986). The moving party bears the burden of showing that there is no genuine issue of fact and it must prevail as a matter of law, or that the non-moving party has not shown facts relating to an essential element of the issue for which he bears the burden. Celotex, 477 U.S. at 331. If either showing is made then the burden shifts to the non-moving party, who must demonstrate facts which support each element for which he bears the burden and must establish the existence of genuine issues of material fact. Id. The non-moving party "may not rest upon the mere allegations ...

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