emergence from anesthesia

The US Court of Appeals for the Eighth Circuit today issued a decision affirming a district court’s grant of summary judgment against a False Claims Act (FCA) relator in United States ex rel. Donegan v. Anesthesia Associates of Kansas City, PC, on which we previously posted.  The case involved a dispute over whether a regulation required an anesthesiologist to be present in the operating room when the patient “emerges” from anesthesia, and the district court had granted summary judgment on the grounds that the defendant had reasonably interpreted the regulation as not requiring presence in the operating room.  The district court’s decision was important because it made clear that the defendant’s interpretation of an ambiguous regulation need not be the “most reasonable” interpretation.

The Eighth Circuit agreed with the district court, holding that the relator could not establish scienter because the regulation was ambiguous, and the defendant’s interpretation was objectively reasonable.  The court held:

Here, the question is whether AAKC’s reasonable interpretation of the ambiguous regulation precludes a finding that it knowingly submitted false or fraudulent claims, even if CMS or a reviewing court would interpret the regulation differently. Relator simply failed to submit evidence refuting AAKC’s strong showing that its interpretation was objectively reasonable. Relator’s experts expressed their opinions that emergence as referred to in Step Three should end before an AAKC patient is transferred to the PACU. But Relator’s contention that the Medicare regulations be interpreted in this fashion is a claim of regulatory noncompliance, not an FCA claim of knowing fraud.  (internal citations and quotations omitted)

This result underscores the fact that an FCA case based on alleged noncompliance with a regulation that is subject to multiple, reasonable interpretations can be a risky endeavor for a relator.

A recent district court decision delivered a decisive blow to False Claims Act (FCA) relators seeking to survive summary judgment in cases based on ambiguous regulations. In United States ex rel. Donegan v. Anesthesia Associates of Kansas City, PC, the United States District Court for the Western District of Missouri granted summary judgment to the defendant on June 9, 2015, holding that because the regulation at issue was ambiguous and the defendant’s construction of it was reasonable, the defendant was entitled to summary judgment on the issue of scienter.

The case involved meaning of the term “emergence” as used in anesthesiology. The applicable regulation required that, in order to bill at a particular rate, an anesthesiologist must be present during a patient’s “emergence” from anesthesia, without defining that term. The parties differed on whether the term included a patient’s recovery in the recovery room as well as in the operating room. The defendant argued that it included both; as such, even if an anesthesiologist was not present in the operating room when the patient came out of anesthesia, if he/she was present in the recovery room, the emergence requirement was satisfied. The relator offered evidence supporting a contrary definition, limiting “emergence” to the operating room.

The court held that the relator could not prove knowing submission of false claims, finding that the definition of “emergence” was ambiguous and undefined, and that “[a]lthough there is a consensus within the anesthesiology community that emergence begins in the operating room with the cessation of the delivery of anesthetic agents, there is no agreement on where it ends.” The court found the defendant’s interpretation reasonable, even if not “the most widely held or most reasonable definition” and even if an opportunistic interpretation, inasmuch as the defendant had “a financial motive to interpret the regulation this way.” In reaching its holding, the court rejected not only the relator’s arguments, but those advanced by the United States in a statement of interest, in which it suggested that the scienter analysis should include examining the “steps the defendant took to ascertain the government’s construction of an ambiguous regulation.”

The court’s decision makes sense, and is an outgrowth of the often-cited notion that matters of scientific disagreement cannot give rise to FCA liability. Where an FCA claim is premised on a regulation that uses an undefined medical term that is subject to different interpretations, a provider should not rationally be held to have engaged in fraud if the provider reasonably interpreted the ambiguity, even in a “less reasonable” way than the relator and even if in a manner that inured to the provider’s financial benefit.