8th Circ finds no evidence of Medicaid fraud by Planned Parenthood

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  • No evidence Planned Parenthood intentionally miscoded abortions to get insurance coverage
  • $12 up-charge ‘at most’ a mistake or negligence, court says

(Reuters) - A former clinic director failed to offer evidence that Planned Parenthood of the Heartland intentionally miscoded abortion-related services to get Medicaid to pay for them between 2006 and 2008, a federal appeals court held.

The 8th U.S. Circuit Court of Appeals upheld a win Friday for the Iowa-based nonprofit, represented by Dentons, on the remnants of a False Claims Act lawsuit that the Alliance Defending Freedom and Hixson & Brown had filed in 2011 on behalf of Susan Thayer.

On the miscoding claim, Thayer accused Planned Parenthood of the Heartland (PPH) of coding post-abortion followup visits as generic post-surgical consultations, then adding the code to bills for contraceptive counseling or other services that Medicaid does cover.

The consultation did not increase the charges on two of the six sample bills Thayer submitted as evidence of PPH's practice, but had resulted in a one-level upgrade, good for an extra $12, on each of the other four.

“We assume without deciding that she is right, and that Planned Parenthood falsely billed (Medicaid) for these services,” Circuit Judge Jonathan Kobes wrote. However, that alone would not support Thayer’s claim that the falsehood was intentional, he said.

Like the lower court, “we think a one-level difference in billing, resulting in less than a $12.00 reimbursement difference, is at most evidence of an innocent mistake or negligence, not a willful lie to cheat the government,” Kobes wrote. He was joined by Circuit Judges Steven Colloton and Roger Wollman.

PPH’s attorneys did not immediately respond to requests for comment on Friday. PPH merged with several other Planned Parenthood organizations in 2018 to create Planned Parenthood North Central States.

Thayer’s attorneys did not respond directly, but the Alliance Defending Freedom emailed a statement saying that ADF and its client are considering their options.

According to Thayer’s 2011 complaint in U.S. District Court in Des Moines, she had worked for PPH between 1991 and 2008 and had managed two of its centers.

Thayer alleged that the organization overbilled Medicaid in many different ways between 2002 and 2008, resulting in an estimated $28 million in extra charges.

U.S. District Judge John Jarvey granted PPH’s motion to dismiss the case in 2013, finding that Thayer had not plausibly alleged fraud.

Thayer appealed, and the 8th Circuit revived some of her claims in 2014. Jarvey further narrowed the suit on remand.

By 2019, just two counts remained on Thayer’s Third Amended Complaint: the abortion-related coding claims, and an allegation that PPH had distributed oral contraceptives to women without a prescription. Both sides moved for summary judgment.

On the upcoding claim, Jarvey found that Thayer’s evidence would support, at most, an inference of non-actionable coding or billing errors. The 8th Circuit agreed on Friday.

On the contraceptive claims, Jarvey ruled for PPH after finding that Thayer had insufficiently pleaded her case. She sought judgment on the basis that PPH had billed Medicaid for extra cycles of pills it dispensed to clients whose prescriptions had expired, but her complaint was focused on bills for contraceptives dispensed before the client ever obtained a prescription, he said.

The 8th Circuit affirmed that ruling as well on Friday.

The case is Susan Thayer v. Planned Parenthood of the Heartland, 8th U.S. Circuit Court of Appeals, No. 20-2151.

For Thayer: Christopher Schandevel of Alliance Defending Freedom and J. Russell Hixson of Hixson & Brown

For Planned Parenthood of the Heartland: Carter White and Kristen Rodriguez of Dentons

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