Last month, in Government Employees Insurance Co. v. Cereceda, 2021 WL 148738 at *6-7 (S.D. Fla. Jan. 15, 2021) (“Cereceda”), the Southern District of Florida issued a discovery ruling that insurers should consider carefully in connection with their fraud claims against health care providers which allege the providers committed fraud by billing for services rendered to patients pursuant to predetermined treatment protocols designed to take advantage of patients’ insurance benefits, rather than to render medically necessary treatment tailored to the needs of each individual patient. In Cereceda, the provider-defendant complained that GEICO’s interrogatory answers were deficient. The court reviewed the answers, along with the expert report of GEICO’s medical expert, and concluded that if GEICO planned to prove at trial that defendants implemented a fraudulent predetermined protocol to treat patients by introducing any evidence pertaining to individual patients or claim files, it was required to amend its interrogatory answers to identify with specificity each allegedly fraudulent service and the reason each such service was fraudulent. This legal update first explains predetermined protocol cases, then discusses Cereceda in detail, and concludes with lessons learned from Cereceda.

What Is A Predetermined Protocol Case?

When an insurer sues a health care provider for fraud based on the provider’s submission of bills for services rendered pursuant to a predetermined protocol, the fraud theory is not that treatment rendered to a single patient was medically unnecessary because it can be proved that the patient either did not benefit from the treatment or required different treatment. Rather, the insurer is alleging that the provider purported to treat an entire patient population in a cookie-cutter manner which, in fact, makes no medical sense, in order to financially enrich the provider by maximizing collection of the patients insurance benefits. Indeed, in predetermined-protocol cases, insurers often explain that the fraudulent nature of each bill or claim is not apparent when reviewed in isolation. Instead, the fraud emerges only when the bills and supporting documentation across all claims at issue are viewed together as a whole. See, e.g., Metro. Prop. & Cas. Ins. Co. v. Savin Hill Family Chiro., Inc., 266 F. Supp. 3d 502 (D. Mass. 2017) (rejecting statute of limitation argument in motion to dismiss fraud claim where insurer alleged the “breadth of the Defendants’ entire fraudulent scheme, including their fraudulent treatment practices and billing protocols remained undetectable in the individual claims investigations”). Insurers routinely survive motions to dismiss in predetermined protocol cases, and indeed have prevailed at trial. See Cereceda, 2021 WL 148738 at *7 (citing cases for proposition that insurers can prove fraud with evidence “that the overall treatment protocol was invalid” and need not “provide individualized proof to demonstrate that each healthcare service at issue was medically unnecessary”).

What Happened In Cereceda?

In Cereceda, GEICO alleged that a group of providers submitted thousands of claims for treatment purportedly rendered pursuant to a fraudulent predetermined protocol. Defendants served interrogatories which asked GEICO to “pinpoint which of the healthcare services were fraudulent, which charges . . . were for medically unnecessary services, which charges . . . were for services provided by an unsupervised massage therapist, which charges . . . used a billing code which misrepresented and/or exaggerated the level of service provided, which charges . . . were provided by individuals who lacked the requisite licenses, and which charges . . . were for services never provided.” Id., 2021 WL 148738 at *1. GEICO responded that all Defendants’ claims were fraudulent, and attached to its answer a list of the allegedly fraudulent services, the CPT Code for each service, and the amount GEICO paid for each service. See Government Employees Insurance Co., v. Cereceda, No. 19-22206, S.D. Fla. [Dkt. 115-5 at 2]. Notably, it is unclear whether GEICO listed all the patients who purportedly received these services or the dates of service. GEICO further responded that all defendants’ services, which it had listed, were medically unnecessary because “they were not provided in accordance with generally accepted standards of medical practice, were not clinically appropriate in terms of type, frequency, or extent, and were provided primarily for the convenience of the patient, physician, or other health care provider.” Id. [Dkt. 115-5 at 2.] GEICO identified services that were allegedly fraudulent because they were provided by unsupervised massage therapists by responding that this category included charges for all services billed by 12 individuals whom it identified by name, as well as all charges for services billed by anyone with the title “LMT.” Id. [Dkt. 115-5 at 3-4.] In response to an interrogatory asking GEICO to identify each charge for a service that was billed using a code that misrepresented or exaggerated the level of service provided, GEICO responded that all charges for services at certain identified clinics using CPT Codes 99203, 99213, and 99214 were misrepresented or exaggerated. Id. [Dkt. 115-5 at 5.]

Defendants argued that GEICO’s interrogatory answers were “incomplete and lack[ed] the specificity needed to allow them to adequately defend against the claims.” Cereceda, 2021 WL 148738 at *2. Thus, they requested an order compelling complete answers or, alternatively, prohibiting GEICO from “presenting, in support of their claims, any evidence pertaining to why they believe any individual medical services are fraudulent.” Id.

The court responded to the discovery dispute by ordering the parties to file memoranda addressing “the discoverability of information on a patient-by-patient basis, file-by-file basis, or medical service-by-medical service basis in light of Plaintiff’s contention that all medical services provided were medically unnecessary.” Id. at *3. In addition, the court told the parties to file their expert reports and address in the memoranda “the possibility that Plaintiffs’ expert might at trial be asked to testify about specific patient file examples to support Plaintiffs’ position that all services to all patients were medically unnecessary.” Id.

After reviewing the memoranda and expert reports, the court decided “to give Geico a choice,” namely “if it sticks with its chosen strategy of using a non-specific protocol approach, then its experts will not be able to testify about any specific patient, claim, or service -- even if it is for ‘illustration’ purposes. On the other hand, if Geico wants to preserve its ability to have an expert give trial testimony which mentions in any way any specific claim, patient, or service, then it will need to fully and specifically answer the interrogatories at issue.” Cereceda, 2021 WL 148738 at *8. The court did not elaborate regarding what additional information it expected GEICO to provide in order to “fully and specifically answer the interrogatories. Id. In reaching its conclusion, however, the court did explain the following:

  • Both GEICO and defendant failed to provide the court with any authority addressing the scope of discovery in predetermined-protocol cases, (Id. at *2-3);
  • It was the court’s understanding that “Geico and its experts ha[d] not analyzed the case on a patient-by-patient, claim-by-claim, service-by-service basis,” although it recognized that GEICO’s expert represented in his report “that he reviewed more than 450,000 invoices concerning approximately 8,000 patients,” (Id. at *7, *3);
  • GEICO’s expert report contained “conclusions which seem[ed] to reflect a less-than-all assessment of claims as being fraudulent,” namely that, “Defendants’ practices used pre-determined treatment protocols for ‘the substantial majority’ of their patients, which ‘primarily’ consisted of medically unnecessary purported services without regard for the individual circumstances of the patients subject to these services,” and that “in a ‘significant’ number of cases the purported therapy services ‘evidently’ were performed by unsupervised individuals who lacked credentials to perform the services without direct supervision,” (Id. at *4, 8) (emphasis added);
  • “[N]one of [GEICO’s expert] opinions or conclusions mention any specific patient, file, or service,” (Id. at *4); and,
  • If GEICO’s expert tried “to bolster his opinion testimony with specific illustrations,” GEICO “would be seeking to introduce some of the very same evidence it refuses to provide in discovery,” which “would be inequitable and unduly prejudicial to Defendants,” (Id. at *7).

Based on the foregoing, the court allowed GEICO five days to advise defense counsel of its choice. GEICO opted to amend its interrogatory answers to preserve its ability to introduce specific evidence about particular claims, patients, and services.

In the future, provider-defendants in predetermined protocol cases may cite Cereceda to support a commonly-used defense strategy of trying to trap insurers into taking on the extremely difficult, if not impossible, task of providing discovery, and ultimately proving, why each claim - in a vacuum - is fraudulent on a service-by-service, patient-by-patient, or claim-by-claim basis. As described above, in predetermined protocol cases, the fraudulent nature of claims is often not apparent when claims are reviewed in isolation. Rather, the fraud comes into view only after many claims are reviewed together as a whole, allowing unlikely patterns in treatment and bills to emerge. Thus, to prevail in a predetermined protocol case, an insurer does not have to prove, on a patient-by-patient basis, the actual condition of each patient or which specific treatments were unnecessary. Rather, an insurer can prove that a provider-defendant did not legitimately treat patients by establishing patterns of treatment and documentation that do not make medical sense.

As described next, Cereceda provides valuable lessons that insurers should heed when preparing and litigating predetermined protocol cases in order to avoid this quintessential trap set by provider-defendants.

What Lessons Can Insurers Learn From Cereceda?

First, to satisfy discovery obligations, an insurer alleging a fraudulent predetermined protocol must identify with sufficient specificity the claims at issue (e.g., patient name, services, and dates of service). Assuming the claims are sufficiently identified, an insurer should be permitted to explain in a global or wholesale manner why categories of claims are fraudulent. Courts have not required insurers to attempt to explain why each individual service purportedly rendered to each patient, in a vacuum, is fraudulent.

Second, when alleging that all of a provider’s claims are fraudulent because they were submitted pursuant to a fraudulent predetermined protocol, it is critical that the insurer and its expert have actually reviewed all the claims, and that they make this point clear to the court and defendants. In Cereceda, while it seemed the expert had reviewed all defendants’ claims, the court nevertheless concluded, “Geico and its experts have not analyzed the case on a patient-by-patient, claim-by-claim, service-by-service basis.” To avoid ambiguity, the expert report should itemize all files and documents the expert considered. Also, insurers alleging predetermined-protocol cases must resist attempts by defendants to pigeon-hole them into agreeing that their case is not based on a patient-by-patient analysis. When an insurer and its medical expert are clear that their conclusions are based on a review of all relevant files and apply to all claims, it is less likely that evidence pertaining to an individual patient would be disallowed at trial simply because the patient was not mentioned by name in interrogatory answers or an expert report.

Third, in a predetermined-protocol case, it is critical to have consistency in treatment and patterns across patients, claims and files. Before filing such a case, insurers and their experts must identify any variation in treatment or patterns and consider whether the variation signifies that treatment was tailored to individual patients - thus undermining a predetermined protocol theory - or whether there are non-medical explanations for variation (e.g., a different doctor filled in).

Fourth, where an insurer’s medical expert opines that a treatment protocol is not medically legitimate, he or she must explain in the report which precise services comprise the protocol and why each service, or the combination of services, does not make medical sense.

Fifth, to the extent there is little to no treatment variation in the patient population, experts should avoid language in their reports which suggests otherwise. If there is variation, experts should address deviations from the protocol in their reports. In Cereceda, the court honed in on the inconsistency between GEICO’s position that all defendants’ claims were fraudulent and medically unnecessary, and its expert report which suggested that most but not all services were rendered pursuant to the fraudulent protocol. Absent this inconsistency, the court may have reached a different conclusion regarding the sufficiency of GEICO’s interrogatory answers.

Sixth, although insurers alleging fraudulent predetermined protocols need not include a claim-by-claim, patient-by-patient, or service-by-service analysis in interrogatory answers or expert reports, illustrative examples are powerful and should be included in responding to discovery requests. Likewise, if other evidence suggests a provider’s claims are fraudulent because treatment is predetermined and not tailored to individual patients - like evidence of patient solicitation or bribes - the insurer should include that information to bolster its theory.

In sum, an insurer alleging fraud based on a predetermined treatment protocol should not have to prove that each claim, in a vacuum, is fraudulent. A middle-ground accepted by courts allows insurers to rely on non-credible patterns in providers’ bills and documentation to explain globally why groups of claims are fraudulent, provided the insurer sufficiently identifies the claims at issue.