A federal appellate court recently upheld the conviction of a Maryland cardiologist who was charged with health care fraud for performing coronary stent procedures-the insertion of small tubes, known as stents, in coronary arteries-when the procedures were not medically necessary. The opinion, United States v. McLean, 715 F.3d 129 (4th Cir. 2013), clarifies when a medical provider can become criminally or civilly liable for fraud in connection with medically unnecessary treatment, and what types of evidence suffice to support such liability. It also clarifies what types of fraud could give rise to qui tam whistleblower claims under the False Claims Act. 

Dr. John McLean was a cardiologist with privileges at Peninsula Regional Medical Center ("PRMC"), a hospital in Salisbury, Maryland. According to the court's opinion, "in the summer of 2006, PRMC began investigating McLean's stenting practices after a quality control review revealed he had placed a stent in a coronary artery with no significant blockage, or 'stenosis.' That review concluded that McLean had performed "inappropriate stents" in approximately half of the cases reviewed. Soon thereafter, in late 2006, McLean "resigned" his privileges with the hospital, citing an eye condition that caused loss of vision in one eye. But, as the court noted, despite his claim of vision loss, "McLean continued to see patients and review diagnostic test results in his office."

Federal prosecutors subsequently learned about the unnecessary stents (how the prosecutors learned of the issue is not revealed in the opinion; more on this below), and in the spring of 2007 subpoenaed patient files from McLean's practice. According to the opinion, the government somehow received "information that the files were in peril" (again, the source of that information is not identified; more on this below), obtained a search warrant, and raided McLean's office. As the opinion explains, "when the FBI agents arrived at McLean's office, they found subpoenaed files stacked on McLean's desk and a shred bin nearby. McLean admitted that he was removing documents from the files for shredding."

McLean was charged, and convicted, under two closely-related statutes. First, he was charged with "health care fraud" for defrauding healthcare insurers by submitting claims for payments for the unnecessary stent procedures. Second, he was charged with making "false statements" in violation of a statute that makes it illegal to knowingly make false or fraudulent statements "in connection with the delivery of or payment for health care benefits, items, or services."

On appeal, McLean argued that evidence of a lack of medical necessity for some percentage of his stent procedures was not enough to impose criminal liability. He argued, for example, that the health care fraud statute was "unconstitutionally vague" as applied to him, because it did not give doctors fair notice of when they might become subject to criminal liability for engaging in conduct that might simply be negligent. The court had no problem rejecting that argument, reasoning that the line between performing medically unnecessary procedures negligently or criminally was clear. If a doctor negligently performs a medically unnecessary procedure, the doctor is not engaged in criminal conduct. But, as the court pointed out, if a doctor intentionally performs a medically unnecessary procedure, and bills for it, then the doctor has crossed the line into criminal fraud.

The court then turned to the question of whether the government had provided sufficient evidence that McLean had intentionally inserted medically unnecessary stents. The court concluded that the evidence was sufficient to support the convictions, and in so doing provided a road map of the types of evidence that are sufficient to prove criminal healthcare fraud (and, thus, by necessary implication, civil healthcare fraud under the False Claims Act). First, the court held that "McLean's pattern of overstating blockage by a wide margin and placing unnecessary stents in a large number of cases was direct evidence of a fraudulent scheme." Second, the court focused on evidence that McLean tried to "cover his tracks," thus suggesting that he knew he was engaged in wrongdoing. For example, he gave certain patients "misleading pictures purporting to show cleared blockage when the angiogram, viewed in full, showed no significant blockage." He also recorded symptoms in certain patients' medical records-such as chest pains-that supported doing a stent procedure, when in fact those patients had never suffered those symptoms. Third, the court focused on McLean's shredding of medical records after he received the subpoena. Finally, the court held that the government had produced sufficient evidence of motive, noting that "McLean received reimbursement for each stent procedure he performed, as well as for a series of regularly scheduled diagnostic tests after the procedure, which were administered to patients at his office pursuant to standing orders." Thus, the court upheld the convictions based upon the combined force of three types of evidence: evidence of a pattern of unnecessary procedures, evidence that the doctor knew he was engaged in wrongful conduct (lying to patients, and destroying records), and evidence of a financial motive.

As noted, this was a criminal case, and thus did not involve civil liability under the FCA. However, the hospital where McLean performed the stent procedures separately entered into a settlement with the government in which it agreed to pay $2.8 million, and was subjected to oversight by the Department of Health and Human Services under a so-called "Corporate Integrity Agreement."

Although the court's opinion makes no explicit mention of whistleblowing, it seems clear that one or more whistleblowers were, in fact, responsible for unmasking Dr. McLean and the hospital. This is strongly suggested by two aspects of the court's opinion. First, the government only learned about the unnecessary stents, and began its investigation, in 2007, after the hospital conducted its own review and McLean resigned his privilege. This suggests that the hospital did not inform the government of the problems on its own, but instead tried to keep them "in house." Second, the court's opinion states that the government investigator's raided Dr. McLean's office after learning that his files were "in peril." This suggests that an insider with knowledge of McLean's day-to-day actions was cooperating with the government's investigation.

The decision in United States v. McLean provides helpful guidance on the line between negligent provision of unnecessary care and fraud. It shows that a combination of a statistically-significant number of unnecessary procedures, plus evidence of intentional misconduct, is sufficient to make a case of healthcare fraud. This is true in criminal cases such as the one at issue in the decision, but it is also true in civil cases, including qui tam whistleblower cases, brought under the False Claims Act.