United States District Court, N.D. Indiana, Fort Wayne Division
UNITED STATES OF AMERICA, STATE OF INDIANA, ex rel. YORK HOWZE, Relator, Plaintiffs,
SLEEP CENTERS OF FORT WAYNE, LLC, Defendant.
REPORT AND RECOMMENDATION.
Collins, United States Magistrate Judge.
the Court is a motion for judgment on the pleadings filed on
April 27, 2016, by Defendant Sleep Centers of Fort Wayne, LLC
(“Sleep Centers”). (DE 145). Sleep Centers filed
a brief and exhibit in support of its motion. (DE 146).
Plaintiff York Howze (“Howze”) filed his response
in opposition to the motion on May 19, 2016. (DE 147). Sleep
Centers filed a reply brief in support of its motion for
judgment on the pleadings. (DE 149). Sleep Centers also moved
to strike Howze's response, on grounds that it was filed
untimely three days late. (DE 148). Howze filed a response to
Sleep Centers' motion to strike, stating that he had 28
days to file his response brief to Sleep Centers' motion
for judgment on the pleadings pursuant to Local Rule
56-1(b)(1)(A). (DE 150). Sleep Centers' motion for
judgment on the pleadings, along with its motion to strike
Howze's response brief, were referred to the undersigned
for a report and recommendation pursuant to 28 U.S.C. §
636(b)(1)(B). (DE 154). For the following reasons, I will
RECOMMEND that Sleep Centers' motion to strike (DE 148)
be DENIED and that Sleep Centers' motion for judgment on
the pleadings (DE 145) be GRANTED IN PART and DENIED
FACTUAL AND PROCEDURAL BACKGROUND
is a black board-registered sleep technician, who worked at
Sleep Centers from 2007 until 2010. (DE 4 ¶¶ 1, 6,
15). Howze's initial job description as Operations
Manager was identical to that of Farren Klopfenstein, in that
they were supposed to co-manage the center in Fort Wayne with
equal responsibilities, although Klopfenstein's
description was “weighted toward Human Resources,
Finance, [and] Scoring Records” while Howze's job
description was more “weighted toward Operations and
facilities management.” (DE 4 ¶ 6).
2007, Amy Clevenger, an employee of Tri-State Medical Group
(“TSMG”), the company that Sleep Centers hired to
handle its credentialing with the Centers for Medicare and
Medicaid Services (“CMS”), began a Medicare
provider application for Sleep Centers. (DE 4 ¶ 7).
Clevenger emailed Stephen Smith, the CEO of Sleep Centers,
with a list of questions regarding the corporate structure
and how the center should be credentialed under Medicare and
Medicaid. (DE 4 ¶ 7). Smith forwarded the email to Howze
and Klopfenstein, asking that they answer Clevenger's
questions; Howze never received the email. (DE 4 ¶ 7).
Klopfenstein did receive the email, and she responded to
Clevenger by answering most of the questions, although she
did not know the answer to Clevenger's questions
regarding Medicare and Medicaid or her questions regarding
whether the center was an independent diagnostic testing
facility (“IDTF”) or a group practice. (DE 4
¶ 7). Howze also did not know the answers to these
questions. (DE 4 ¶ 7).
called CMS for guidance regarding the application. (DE 4
¶ 8). Clevenger then “knowingly credentialed the
Sleep Center incorrectly using the incorrect application form
and incorrectly designating the Center as being part of a
‘Group Practice' when the Center should have been
classified using the CMS 855B application form and designated
as an ‘Independent Diagnostic Testing
Facility.'” (DE 4 ¶ 8). Howze had no
involvement with the credentialing process. (DE 4 ¶ 8).
Clevenger sent the application to Smith for his review and
signature, and she then forwarded the application to CMS. (DE
4 ¶ 8). Clevenger's actions “led to a
negligently submitted Medicare provider application which
prompted some 1500 fraudulent claims submitted to CMS between
2007-2009.” (DE 4 ¶ 7).
January 2009, Howze's job description changed from
Operations Manager to the position of Compliance
Officer/Finance Manager. (DE 4 ¶ 11). Howze perceived
this change in roles to be a demotion based on his race, and
he later filed an EEOC complaint in March 2010. (DE 4 ¶
early September 2009, another employee who worked at Sleep
Centers gave an article to Howze from a conference that the
employee had attended. (DE 4 ¶ 12). The employee
informed Howze that everyone at the conference had been
concerned about a sleep lab in Texas that had been
investigated by CMS for not being properly credentialed. (DE
4 ¶ 12). Howze read the article, which recommended that
all sleep centers ensure that they were “properly
credentialed” with CMS either as an IDTF, a group
practice, or as a hospital. (DE 4 ¶ 12).
September 3, 2009, Howze emailed Clevenger to ask her whether
the center was credentialed as an IDTF. (DE 4 ¶ 12).
Clevenger responded, “No, and it could be the reason
why I am having trouble getting reimbursed for
Medicaid.” (DE 4 ¶ 12). Clevenger also stated to
Howze that “she had not kept up with changes in
Medicare/Medicaid in years . . . .” (DE 4 ¶ 12).
both Howze and Klopfenstein were familiar with the rules that
applied to hospital-based sleep centers, they were unaware
that the IDTF rules and standards were applicable to the
center, because they had not been provided with the necessary
training. (DE 4 ¶ 13). On September 8, 2009, Clevenger
told Howze that the center had “the ‘option'
of filing as an IDTF.” (DE 4 ¶ 14). Howze was
“skeptical” of this being just an “option,
” and he therefore “continued to ask [via email]
whether they should still bill Medicare for patients while
the [center was] knowingly improperly credentialed.”
(DE 4 ¶ 14).
the business plan approved by the Board before the opening of
the center, Howze was to provide for proximate supervision,
in that he was supposed to work nights, while Klopfenstein
worked days. (DE 4 ¶ 15). However, Smith changed this by
ordering Howze to work primarily on days in order to assist
Klopfenstein. (DE 4 ¶ 15). On September 10, 2009, Howze
was informed that the method of remote viewing by computer
links that Sleep Centers was using “did not qualify as
‘proximate supervision' per Medicare/Medicaid
criteria which required a Board of Registered
Polysummographic Technologist to supervise the
studies.” (DE 4 ¶ 15). Howze then began scheduling
meetings with Sleep Centers' board-registered technicians
in order to inform them that they had the responsibility to
cover and train technicians at night. (DE 4 ¶ 15). After
Howze had one such meeting, he was “abruptly removed as
Operations Manager and the untrained Klopfenstein was
installed in Howze's place.” (DE 4 ¶ 15).
Klopfenstein then told Howze that she was not going to
continue having meetings with the registered technicians, nor
would she require them to provide coverage for non-registered
technicians. (DE 4 ¶ 15).
September 10, 2009, Smith emailed Howze, Klopfenstein, and
Clevenger regarding Clevenger's alleged reasoning for
credentialing the center as a group practice, stating that
this was done because the “Neurology Division of
[Allied Physicians Incorporated] was in the business of
billing for the facility component of our leased beds at
Lutheran and St. Joe, ” so Clevenger filed the
application as a group practice since the same doctors were
involved. (DE 4 ¶ 16). Smith also stated in the email
that “Klopfenstein tells me she raised the point that
we were an IDTF back in 2007.” (DE 4 ¶ 16). Howze,
however, had only had conversations with Klopfenstein in
which she denied that the center should have been an IDTF.
(DE 4 ¶ 16). Howze was particularly concerned about this
because Klopfenstein had turned away an inspector from CMS
who came to do a mandatory inspection of the center in
January 2008 while Howze was on vacation. (DE 4 ¶ 16).
Howze asked why, if Klopfenstein had “known all along,
” would she would turn away an inspector for a
mandatory inspection. (DE 4 ¶ 16). He received no reply.
(DE 4 ¶ 16).
in September 2009, Smith and Klopfenstein pressured Howze to
verify that he had been providing supervision that met
compliance standards during the time period that he had been
removed from supervising at night. (DE 4 ¶ 15). Smith
threatened to tell the Board that Howze was not doing his
job, since they “[had] no other choice but to say
[Howze] covered nights, ” since he was “salaried,
so there is no way to say” that Howze did not cover
nights. (DE 4 ¶ 15). Klopfenstein and Smith also told
Howze that the complaints filed against him during the night
shifts were proof that proximate supervision was present. (DE
4 ¶ 15). Additionally, Klopfenstein tried to get Howze
and other staff members to say that she worked nights to
cover, although she “rarely if ever supervised night
staff.” (DE 4 ¶ 15).
September 22, 2009, someone by the name of “Mattox,
” who is otherwise undefined in Howze's complaint,
“answered questions as to whether or not the Sleep
Center was indeed an IDTF and whether or not there was
significant exposure to the Center for having violated Stark,
anti-kickback, and Medicare/Medicaid laws due to the
misfiling of the Sleep Center as a ‘Group Practice'
as opposed to an ‘Independent Diagnostic Testing
Facility.'” (DE 4 ¶ 17). At this apparent
meeting with “Mattox, ” it was noted that
repayment might be necessary. (DE 4 ¶ 17).
September 24, 2009, Smith sent an email to Sleep Centers'
staff, informing them that the company was “committed
to fully disclosing to the Centers for Medicare and Medicaid
Services the nature of the Sleep Center's non-compliant
state regardless of the cost, though he had been properly
advised on how to handle the matter.” (DE 4 ¶ 18).
Later that same day, Smith “changed this strategy,
” by placing the blame on CMS because it should have
caught Clevenger's mistake, and further stating that
Clevenger was following the advice of CMS to write in
“Sleep Center” on the “other” space
on the application. (DE 4 ¶ 19). Smith implemented a
strategy to avoid full disclosure of all non-compliance
issues by focusing only on the incorrect “clerical
error” on the application. (DE 4 ¶ 20). Smith
informed CMS that Sleep Centers had always been in
compliance, even though he knew from Howze that over 800
studies were billed under “Group Practice, ” when
the studies did not have appropriate supervision and were
performed by under-qualified staff. (DE 4 ¶ 20). When
Howze informed the Board, Smith, and Clevenger that CMS holds
the provider responsible for the veracity of the information
provided in an application, Howze was then removed as a
point-of-contact for the credentialing process, and he was
forbidden to call CMS. (DE 4 ¶ 20).
September 24, 2009, Sleep Centers suspended the performance
of Medicare/Medicaid sleep studies. (DE 4 ¶ 21). Howze
sent an email to the Medical Director that day, in which he
voiced his concerns and oppositions to Smith's plan to
rely on the clerical error as the only issue of
non-compliance, instead of following the Board's plan to
fully disclose all non-compliance issues. (DE 4 ¶ 22).
next day, on September 25, 2009, Howze sent an email to Smith
to try to convince him not to continue his strategy of
blaming CMS for the problems in the center's
credentialing application. (DE 4 ¶ 23). Howze informed
Smith “that the Center had already identified hundreds
of studies that were performed by the Center that were
non-compliant and should not have been billed to
Medicare/Medicaid, ” and tried to convince Smith that a
“clerical error” would not cover the violations
of both the IDTF and state standards. (DE 4 ¶ 23). In
response, Smith told Howze to “get with the program,
” threatened Howze's employment, and placed blame
on Howze. (DE 4 ¶ 23).
October 30, 2009, Howze suggested via email to Smith that the
center should not wait for a response from CMS for guidance,
but rather should file a correct application. (DE 4 ¶
24). “Smith's response alerted [Howze] to the
continued false intentions of the Board and Smith to defraud
the government by using a strategy that was designed to avoid
paying back each and every study that the Center performed as
a Group Practice.” (DE 4 ¶ 24). In November 2009,
Sleep Centers gave up on waiting for a response from CMS. (DE
4 ¶ 25). Smith was informed by someone at CMS that he
would be waiting for a long time for a response from CMS, and
was further informed that CMS would not recognize anything
other than a proper re-filing of the application. (DE 4
¶ 25). Howze continued to work on the application to
properly reapply. (DE 4 ¶ 25).
November 2009, Smith directed Howze to review the application
with Clevenger. (DE 4 ¶ 26). Howze or Klopfenstein, as
the co-managers, were the only authorized signees who could
initial each page of the application. (DE 4 ¶ 26). Howze
did not feel comfortable with the veracity of the
application, so he refused to initial the pages. (DE 4 ¶
26). Smith repeatedly threatened Howze over two days to try
to get Howze to initial the pages. (DE 4 ¶ 26). Howze
refused to sign it, and Klopfenstein was never asked or
coerced to sign it the way that Howze was. (DE 4 ¶ 26).
Later that month, Smith announced that there was an error in
the application, because it did not identify the past or
present billing arrangement with Fort Wayne Neurology. (DE 4