United States ex rel. Polansky v. Executive Health Resources, Inc. (196 F. Supp. 3d 477, 2016)

United States District Court for the Eastern District of Pennsylvania 2016-05-10

The Public Health and Welfare

Citations

Full opinion text

MEMORANDUM

O’NEILL, J.

Relator Jesse Polansky brings this qui tam action against defendants Executive Health Resources, Inc. (EHR), United-Health Group, Inc. (UHG), United HealthCare Services, Inc. (UHCS), Optum, Inc., Optumlnsight, Inc., Yale-New Haven Hospital, Inc. (YNHH) and Community Hospital of the Monterey Peninsula (CHOMP). Relator brings his claims on behalf of the United States, twenty-eight states and the District of Columbia pursuant to the False Claims Act (FCA), 31 U.S.C. §§ 3729, et. seq., and analogous state laws.

Before me are defendants’ three motions to dismiss relator’s second amended complaint (Dkt. No. 12) pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b): one by EHR (Dkt. No. 52, Ex. A), one by UHG, UHCS, Optum and Optumlnsight (Dkt. No. 51) and one by defendant hospitals YNHH and CHOMP (Dkt. No. 90). Also before me are relator’s opposition briefs (Dkt. No. 62, attached briefs) and the parties’ supplemental briefs (Dkt. Nos. 70, 78, 84 and 89). For the reasons that follow, I will grant in part and deny in part EHR’s motion, grant YNHH and CHOMP’s motion and grant UHG, UHCS, Optum and Optumlnsight’s motion.

BACKGROUND

Relator alleges a nationwide and nearly decade-long multi-million dollar scheme by defendant EHR to defraud Medicare and Medicaid by causing client hospitals, including defendants YNHH and CHOMP, to knowingly and falsely bill patient admissions as inpatient when they should have properly been billed as outpatient services. See Dkt. No. 12 at ¶¶ 2, 5. Defendants UHG, UHCS, Optum and Optumlnsight are EHR’s parent companies; relator seeks to hold them liable both directly and vicariously for EHR’s actions. Id. at ¶¶ 4, 244.

I. The Parties

Relator Jesse Polansky, M.D., M.P.H. is a physician with experience in Medicare, Medicaid, and commercial health insurance. Id. at ¶ 10. Relator held leadership positions within the Centers for Medicare and Medicaid Services (CMS) from 2003-2011. Id. Relator began “advising senior management at defendant EHR regarding regulatory affairs, business development, new product development, and professional services” on or about December 14, 2011 until he left EHR on or about February 13, 2012. Id, at Id. at ¶ 11. Relator observed details about EHR’s business practices while working there and bases his allegations on what he contends he discovered during that time. Id. at ¶ 12.

Relator alleges FCA violations against seven defendants. Defendant EHR is a physician advisor company which “provides payment certification services to hospitals and health care systems for Medicare and Medicaid patients and private commercial health plan patients, pursuant to which cases are certified by EHR for billing purposes as either inpatient or outpatient.” |d. at ¶ 13. EHR provides these certifications “in the context of patients arriving at a hospital and entering the emergency department or as direct admissions as well as patients undergoing outpatient surgery.” Id. EHR also appeals cases for its clients when Medicare - or Medicaid denies coverage for patients who were billed as inpatient. Id. at ¶¶ 13, 168-179.

EHR is a subsidiary of defendant Optu-mlnsight, a “health information, technology, services and consulting company providing software and information products, advisory consulting services, and business process outsourcing to participants in the health care industry.” Id. at ¶ 18. Optu-mlnsight acquired EHR on August 4, 2010. Id. at ¶ 4. Defendant Optumlnsight is a subsidiary of defendant Optum. Id at ¶¶ 16,. 18. Defendant Optum is “one of the main business platforms of UHG” and is a subsidiary of defendant UHCS. Id. at 16. Defendant UHCS is a subsidiary of defendant UHG. Id. at ¶ 15. Finally, defendant UHG is the parent company to all of these subsidiaries and “supplies a broad range of health care services, such as health care benefits to individuals and employers, retail pharmacy network claims processing and assistance to hospitals, to improve clinical performance, financial performance and regulatory compliance.” Id. at ¶ 14.

There are two hospital defendants in this case: YNHH and CHOMP. Defendant YNHH is a privately owned non-profit hospital in New Haven, Connecticut. Id at ¶ 22. YNHH is the largest hospital in Connecticut. Id. at ¶ 202. YNHH “contracted with EHR to perform second level review of Medicare cases” firom “no later than 2008 until at least February 2012.” Id. at ¶ 204. Defendant CHOMP is a privately owned non-profit hospital in Monte-rey, California. Id. at ¶ 21. In 2007, CHOMP “contracted with EHR to perform second level reviews of all Medicare and Medicaid cases” that fail its internal review criteria for inpatient status. Id. at ¶¶ 220, 225.

Relator’s allegations begin in January 2006 against EHR, 2007 against CHOMP, 2008 against YNHH, and August 2010 against UHG and its subsidiaries. Id. at ¶ 27.

II. Regulatory Framework

Medicare is a federal health insurance program for eligible elderly people or people with disabilities. 42 U.S.C. §§ 1395-1395111 (2015). There are four major parts of Medicare, of which parts A and B are relevant here. See 42 U.S.C. §§ 1395c-1395w-6. Medicare Part A covers certain hospital inpatient services, home health services and hospice care. 42 U.S.C. §§ 1395c, 1395d(a). Medicare Part A reimburses hospitals for covered inpatient services based on a patient’s diagnosis at discharge, which may or may not reflect the hospital’s actual costs. See 42 U.S.C. § 1395ww(d)(4), 42 C.F.R. § 412.2(a). Medicare Part B pays for additional health services, including hospital outpatient services. See 42 U.S.C. § 1395k(a)(2)(H). Medicare Part B reimburses hospitals for outpatient services based on a patient’s service or procedure, which may or may not reflect the hospital’s actual costs. See 42 U.S.C. § 13951(t)(í), 42 C.F.R. § 419.2(a).

Medicaid is a health insurance program for low-income people that is jointly funded by the federal government and state governments. 42 U.S.C. §§ 1396-1396w-5. Both federal and state statutes and regulations apply to state-administered Medicaid programs. See 42 U.S.C. § 1396a. CMS, a federal agency under the Department of Health and Human Services, administers the Medicare and Medicaid programs.

III. Alleged Scheme

Relator alleges that defendants perpetrated a scheme to systematically bill false inpatient claims through hospital admissions to Medicaid and Medicare that should have properly been billed "as outpatient claims in order to receive higher reimbursements. Dkt. No. 12 at ¶ 2. All claims for hospital services are billed either as inpatient or outpatient. See id. at ¶¶ 47, 57, 63-65. Medicare and Medicaid reimburse hospitals for medical services at different rates based on patient classification as inpatient or outpatient. Id. at ¶ 63. Hospital billing classifications do not affect the quality of care or the services that patients receive. Id. at ¶ 128. However, billing classifications do significantly affect the amount of payment a hospital receives for the services it provides. Id at ¶¶ 66-67. For this reason, relator alleges that “there is a strong financial incentive for hospitals to formally admit patients as inpatients even though they can be safely and effectively as well as more economically treated as outpatients.” Id. at ¶ 66.

Hospitals must have in place an internal review protocol when classifying patients as inpatients or outpatients before they seek reimbursement from Medicare or Medicaid. See 42 C.F.R. § 482.30. First, a patient’s attending physician “generally makes the initial judgment” about a patient’s admission status. Id. at ¶ 71. Hospitals then complete a first level internal review of attending physicians’ determinations as required by regulation. Id. at ¶ 72. Internal committees within hospitals typically utilize “industry-standard” internal review criteria to evaluate a patient’s initial inpatient or outpatient status. Id. Such committees “can unilaterally change [a] patient[’s] status from outpatient observation to inpatient.” Id. at ¶ 73. When patients do not qualify for inpatient status at the first level of review, hospitals often rely on a “physician advisor” to conduct a second level review. Id. at ¶ 74. Physician advisors may be accessible at the hospital or may work off-site. Id. at ¶ 75.

Relator alleges that many hospitals seek second level reviews of outpatient admissions because Medicare and Medicaid “pay hospitals more for services provided to patients who are inpatient status than for the same services provided to patients who are outpatient status.” Id. at ¶ 81. Relator alleges that the federal government has implemented numerous review programs and “taken significant steps toward preventing hospitals from billing Medicare for inpatient stays that should have been treated as outpatient observation cases.” Id. at ¶ 77.

A. EHR

Relator alleges that defendant EHR is at the heart of a nationwide scheme to defraud Medicare and Medicaid by exploiting the different reimbursement rates between hospital inpatient and outpatient services when it performs second level reviews for hospitals. Id. at ¶ 2. Relator alleges that EHR knowingly misconstrues CMS regulations when it reviews hospital admission determinations, fraudulently certifying “thousands upon thousands of eases” for hospitals to submit to Medicare and Medicaid as inpatient claims rather than outpatient as appropriate. Id.

Defendant EHR is a second level review physician advisor firm. Id. at ¶ 75. EHR has been providing hospitals with second level patient admission status reviews since at least 2003. Id. at ¶ 82. Relator contends that “EHR, by its own calculation, has performed over ten million reviews.” Id. at ¶ 121; see id. at ¶ 82. Relator alleges that hospitals often hire EHR to “perform a second level review of all cases where the attending physician’s initial status determination fails the [internal review criteria at a hospital’s first level of review] for inpatient status.” Id.

Relator alleges that EHR’s marketing platform has been designed to “induce over 2,000 U.S. hospitals to retain EHR to perform inpatient medical necessity reviews.” Id. at ¶ 84. Relator first claims that “EHR goes to great lengths to cause hospitals to believe that [their internal review criteria] are extremely inaccurate, and thereby caus[ing] a significant volume of inpatient cases to be inappropriately billed as outpatient.” Id at ¶ 87. However, relator alleges that the internal review criteria used by hospitals in their first level reviews “have long been widely used and respected within the health care industry [and] routinely result in patients being admitted and billed as an inpatient.” Id

Relator claims that “EHR asserts that it is difficult to get physicians to correctly assign patient status determinations” so that, it is best for hospitals to leave it to EHR’s expertise. Id. at ¶ 91. Relator alleges that EHR “instill[s] fear into hospitals” about their potential liabilities if they do not use EHR to help them navigate Medicare and Medicaid’s complex regulatory frameworks. Id. at ¶ 95-96. Relator alleges that today, as a result of EHR’s marketing tactics, “[o]ver 50% of U.S. hospitals are [EHR] clients.” Id. at ¶ 100. Relator maintains that hospitals pay for EHR’s services “because the increase in revenue attained from submitting cases as inpatient under Medicare Part A, rather than as outpatient under Medicare Part B, typically more than offsets the cost of the service.” Id. at ¶ 103.

EHR allegedly relies on a “secret” set of criteria when performing second level reviews for its clients rather than using the publicly available criteria that hospitals frequently use internally. Id. at ¶ 89. Relator claims that EHR does not reveal its case review criteria to its client hospitals or to the public. Id. at ¶ 117. EHR allegedly “does not follow CMS requirements” or “simply ignores” CMS guidance when evaluating cases to “boost the revenues of its clients hospitals” and its own profits. Id. at ¶ 119. Relator claims that EHR is able to bypass CMS regulations at a large scale because “the payment process is by and large an honor system” where “[c]laims for payment are typically accepted at face value” by reviewing agencies, “[t]he likelihood that any given claim is going to be audited is very remote” and hospitals do not submit EHR’s certifications with their claims. Id. at ¶ 120. Because Medicare and Medicaid pay claims and must then try to recover payments that it discovers to be fraudulent “through retrospective reviews and recoupment activities,” relator alleges that “this process only recovers a fraction of improper payments.” Id. at ¶ 266.

Once EHR completes certifications for its clients, relator alleges that “for virtually all cases it reviews, EHR’s inpatient certification is determinative of the billing status that the hospital submits” for payment. Id. at ¶ 115. Relator alleges that in a compliance initiative by the Department of Health and Human Services targeting “high risk” hospitals, his “preliminary analysis identified that EHR. hospital clients had significantly higher rates of improper payments than other high-risk hospitals.” Id. at ¶ 197.

Relator also alleges that EHR pursues appeals for inpatient claims on behalf of hospitals after hospitals delegate the authority to submit their claims for payment directly to EHR. Id. at ¶ 168. Relator maintains that since CMS has become “more engaged in defending payment denials,” hospitals success rates at appealing claim denials at the ALJ level “have plummeted.” Id. at ¶ 174. Relator alleges that EHR nonetheless encourages hospitals to “be aggressive in allowing it to appeal denied inpatient claims up through the ALJ level,” contributing to current delays of “upwards of four years for a case to reach an ALJ.” Id, at ¶ 172.

Relator contends that EHR’s criteria for classifying a case as inpatient or outpatient fail CMS regulations for several reasons. Id. at ¶¶ 122-165. Relator maintains that EHR does not consider a patient’s prospective length of stay as required by CMS regulations. Id. at ¶ 122. Relator alleges that EHR’s criteria “categorically disregard the payment rules which direct that observation care is appropriate when treating patients whose short term clinical trajectory is uncertain.” Id. at ¶ 123. Relator also maintains that EHR generally does not consider whether diagnostic studies need to be performed in order to help physicians determine whether a patient should be admitted as an inpatient. Id. at ¶ 124. Relator claims that “EHR misinforms and misleads its physician advisors about the pertinent CMS statutory and interpretive guidance.” Id. at ¶ 125.

EHR allegedly determines whether to certify cases as inpatient based on whether cases are [redacted text] rather than considering all of the factors addressed in CMS guidance. Id. at ¶ 131. Relator alleges that if a [redacted text] Id. at ¶ 111. Rather than being an individualized judgment, EHR allegedly completes certifications “rapidly and ... by a formulaic and mechanical process.” Id. at ¶ 112.

Relator alleges that EHR has had internal doubts about its criteria. Id. at ¶ 180. Relator claims that EHR has never “subjected [its] criteria to any meaningful in-temal or external validation,” and when relator attempted to suggest updates to the criteria in line with CMS regulations to EHR leadership, he did not receive a response. Id. at ¶ 138. Soon after he arrived at EHR in December 2011, relator alleges that he encouraged EHR’s CCO to “engage CMS’s leadership in an open discussion on the regulatory requirements for inpatient versus outpatient services.” Id. at ¶ 184. Relator contends that the CCO told him that [redacted text] Id. Relator contends that in a January 2012 email, EHR’s Associate Vice President of Strategic Accounts found it [redacted text] after viewing a diagram from a government-approved agency highlighting that there should be a “24 to 48 hour outpatient window to assess response to therapy and complete essential diagnostic testing.” Id. at ¶ 180.

Relator also alleges that on February 1, 2012, EHR’s CCO asked him to prepare [redacted text] Id. at ¶ 181. Relator alleges that the CCO said that relator’s analysis was needed in order to [redacted text] Id. After relator provided feedback on EHR’s approach on February 9, 2012, he alleges that he “never received any direct feedback” and that “a few hours later he was instructed that he could not attend a monthly regulatory affairs meeting attended by senior management.” Id. at ¶ 182. Relator was also allegedly “forbidden to discuss his concerns with members of the EHR regulatory affairs team or his former colleagues at the Medicare program.” Id. After raising his concerns to EHR’s management and receiving no response, relator contends that on February 9, 2012 he forwarded his memo to EHR’s President and Chief Executive Officer to request a meeting and was denied, Id. at ¶ 188. Relator left EHR sometime in February 2012. Id at ¶ 212.

B. YNHH

Defendant YNHH allegedly contracted with EHR from 2008 until at least February 2012 to review Medicare cases that failed the hospital’s internal review for inpatient admissions. Id. at ¶ 204. Relator alleges that YNHH submitted and was reimbursed for inpatient claims using EHR’s certifications after “EHR applied its fraudulent case review criteria to YNHH’s cases.” Id. at ¶ 206. Relator contends that on December 16, 2011, YNHH was audited by a government review contractor, which retroactively denied all twenty of the twenty cases it reviewed “because they did not qualify for inpatient status.” Id. at ¶ 207. Relator alleges that YNHH “expressed concern to EHR about whether EHR’s reviews were compliant with Medicare and Medicaid rules and regulations.” Id. at ¶ 210. Relator alleges that in January 2012, EHR’s CCO allegedly communicated that “there was a significant risk that YNHH would terminate its contract with EHR.” Id. Relator alleges that EHR’s CCO told someone at YNHH that “even though the government may reject inpatient claims that EHR certifies through probe and audit functions, [the government] will pay a substantially greater percentage without ever reviewing them, resulting in YNHH receiving millions more in reimbursements than it would without EHR.” Id. at ¶ 211. Relator maintains that at the time he left EHR in February 2012, YNHH was still contracting with EHR for its second level review physician advisor services. Id. at- ¶ 212.

Relator alleges that YNHH is hable for the submission of false claims because it was put “on notice” by the December 2011 audit and because it had “a duty to familiarize itself with the legal requirements for inpatient status.” Id. at ¶ 213. Relator maintains that “it is reasonable to infer” that because the government audit of twenty cases found all of them improper for inpatient status, YNHH’s other inpatient claims “were routinely false and YNHH knew or recklessly disregarded that fact.” Id

C. CHOMP

Defendant CHOMP allegedly contracted with EHR from 2007 onward. See id. at ¶¶ 221-26. Relator alleges that once EHR began conducting second level reviews for CHOMP, all Medicare admissions that failed the first internal round of screening for inpatient admissions would be sent for EHR review and CHOMP allowed EHR to make the “final decision regarding admissions status.” Id, at ¶ 226. Relator also maintains that in its first year reviewing cases for CHOMP, EHR certified 81.5% of cases it reviewed for CHOMP as inpatient. Id. at ¶ 227. When CHOMP referred cases to EHR that had been previously billed as outpatient claims, EHR allegedly certified “95% of these cases as inpatient.” Id. at ¶ 228.

Relator contends that CHOMP should have questioned the legality of EHR’s approach because “EHR certified as inpatient such a high percentage of cases” that were initially certified as outpatient by the hospital. Id. at ¶ 229. Relator also contends that CHOMP should have been “skeptical of the legitimacy of EHR’s review criteria and the accuracy of its admission status decisions” because EHR did not share its case review criteria with CHOMP. Id. at ¶ 230. Like YNHH, relator alleges that CHOMP submitted false claims relying on EHR’s certifications although it had “a duty to familiarize itself with the legal requirements for inpatient status.” Id. at ¶ 233.

D. UHG and subsidiaries

Many of relator’s allegations against UHG and its subsidiaries are grouped together under actions taken by “the UHG Defendants.” See id. at ¶ 239. For example, relator contends that “the UHG Defendants acquired EHR” in August 2010 through Optumlnsight. Id. Relator alleges that because EHR offers a single, highly specialized second level review service, a “highly-sophisticated acquirer like [any of the] the UHG Defendants[] would undoubtedly engage in a due diligence review of EHR’s service.” Id. at ¶ 245. Relator alleges that while completing due diligence, UHG and its subsidiaries “learned, or deliberately ignored,' that EHR’s review process repeatedly results in the submission of false claims for inpatient billing by hospitals.” Id. at ¶ 247. In the alternative, relator contends that if UHG and its subsidiaries did not “review and test” EHR’s model, they “deliberately ignored or recklessly disregarded that EHR is engaging in a systemic scheme that defrauds the government.” Id.

Relator alleges that UHG and its subsidiaries have substantially benefitted financially from their acquisition of EHR. Id. at ¶ 259. Additionally, relator contends that he put UHG and its subsidiaries on notice of EHR’s alleged fraudulent scheme when he discussed his concerns about EHR with representatives from Optum and UHG on June 11, 2012. Id. at ¶ 270. Relator claims that he offered to “assist in correcting EHR’s business practices” or answer any questions but never heard back from any UHG or subsidiary representatives. Id at ¶ 274. Relator then filed his initial complaint in this case on July 26, 2012, Relator’s specific allegations of wrongdoing for each defendant are listed below.

1. UHG

Relator alleges that after Optumlnsight acquired EHR, “EHR’s employees became employees of UHG.” Id. at ¶ 253. Relator also alleges that UHG “collaterally benefits” from EHR’s scheme because commercial alternatives to Medicare Part A — such as Medicaid Part C plans offered by UHCS — “become more attractive.” Id. at ¶¶ 261,266.

2. UHCS

Relator asserts that as part of the due diligence conducted by UHG and its subsidiaries, a “sophisticated team of experts from UHCS conducted an extensive review of EHR’s operations, including a detailed evaluation of ... its case review criteria.” Id. at ¶ 246. Relator alleges that “several EHR employees were transferred to new positions within UHCS” after Optumln-sight acquired EHR, including a physician executive and a physician advisor. Id. at ¶¶ 253-54. Relator alleges that both of these employees “were trained' to be experts in applying the EHR case review criteria” and that one employee “was moved to UHCS to serve as a high level resource” on EHR’s “case review criteria, business platform, and business practices.” Id. at ¶ 254.

UHCS and UHG have also allegedly used and “publicly endorsed” one form of internal review criteria used by many hospitals in their first level review of patient admissions decisions. Id. at ¶ 263. Relator maintains that as a result, UHCS is either “fully aware of the material differences” between EHR’s criteria and the criteria it has endorsed, or has “willfully turned a blind eye” to the differences. Id. at ¶ 264.

3. Optum

Relator contends that a current Group Executive Vice President at Optum and former Chief Executive Officer at Optu-mlnsight executed corporate documents in August 2010 that “represented he was EHR’s President.” Id. at ¶ 250. Relator maintains that Optum and Optumlnsight promote EHR’s services on their websites. Id. at ¶¶ 255-57. Relator alleges that because Optum and Optumlnsight market EHR, “both entities are either aware of the fraudulent scheme alleged ... or are acting in reckless disregard of the scheme.” Id. at ¶ 258.

4. Optumlnsight

Relator alleges that after Optumlnsight acquired EHR, Optumlnsight’s managers “were promptly installed at top levels of EHR management,” noting one manager who moved to EHR. Id. at ¶ 248. The Chief Medical Officer for Provider Consulting at Optumlnsight is allegedly a faculty member at an EHR-managed educational program. Id. at ¶ 249. Optumln-sight’s current President of Life Sciences represented that “he was EHR’s Executive Vice President, Chief Operating Officer, and Assistant Treasurer” in EHR’s amended articles of incorporation in August 2010. Id. at ¶ 251. Optumlnsight’s General Counsel was allegedly listed as EHR’s Secretary on EHR’s corporate profile website as of May 14, 2018. Id. at ¶ 252.

E. Counts

Relator’s 182-page complaint ends with sixty-six counts against defendants under both state and federal law. The first four counts are federal FCA claims against EHR, UHG and its subsidiaries, YNHH and CHOMP. Id. at ¶¶ 275-301. Count one claims that EHR and UHG and its subsidiaries violated the FCA under 31 U.S.C. § 3729(a)(1)(A) (post-FERA)/31 U.S.C. § 3729(a)(1) (pre-FERA) by providing false certifications of inpatient admissions to client hospitals, causing the submission of false claims, and directly submitting false claims on behalf of client hospitals. Id. at ¶¶ 275-281. Count two claims that CHOMP and YNHH violated the same FCA provisions by knowingly submitting false inpatient claims for reimbursement in contravention of applicable regulations. Id. at ¶¶ 282-288. Counts three and four claim that EHR, UHG and its subsidiaries, YNHH and CHOMP violated 31 U.S.C. § 3729(a)(1)(B) (on or after June 7, 2008)/31 U.S.C. § 3729(a)(2) (before June 7, 2008) by knowingly making or using a false record or statement that is material to a false claim or to get a false claim paid by the government. Id. at ¶¶ 289-301.

Relator’s counts six and eight claim that CHOMP violated the California FCA based on false Medicaid claims on the same grounds as the federal FCA. Id. at ¶¶ 307-311, 317-321. Counts twelve and fourteen claim that YNHH violated the Connecticut FCA based on false Medicaid claims on the same grounds as the federal FCA. Id. at ¶¶ 337-341, 347-351. Relator’s remaining counts claim that EHR and UHG and its subsidiaries violated the state FCAs of twenty-eight states and the District of Columbia FCA on the same grounds as the federal FCA. Id. at ¶¶ 302-06, 312-16, 322-36, 342-46, 352-611.

F. Procedural History

Relator commenced this suit on July 26, 2012. The action was filed under seal as required by 31 U.S.C. § 3730(b)(2). Relator filed an amended complaint on June 12, 2013 and a second amended complaint on March 24, 2014 while the United States considered intervention. The United States declined to intervene in this case on June 27, 2014, after which relator served all defendants.

I have granted, or will grant in an order accompanying this memorandum, all parties’ motions to file their motions and briefs under seal. Defendants filed three motions to dismiss relator’s complaint under Federal Rule of Civil Procedure 12(b)(6) and 9(b) and filed supporting briefs and reply briefs. Relator filed a reply brief and sur-reply brief in opposition to all defendants’ motions.

STANDARD OF REVIEW

I. Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss all or part of an action for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Typically, “a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations,” though plaintiff’s obligation to state the grounds of entitlement to relief “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 660 U.S. 644, 665, 127 S.Ct. 1965, 167 L.Ed.2d 929 (2007). “Factual allegations must be enough to raise a right to relief above the speculative level ... on the assumption that all of the allegations in the complaint are true (even if doubtful in fact).” Id. (citations omitted). This “simply calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of’ the necessary element. Id at 556, 127 S.Ct. 1955. The Court of Appeals has made clear that after Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), “conclusory or ‘bare-bones’ allegations will no longer survive a motion to dismiss: ‘threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.’ To prevent dismissal, all civil complaints must now set out ‘sufficient factual matter’ to show that the claim is facially plausible.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009). quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. The Court also set forth a two part-analysis for reviewing motions to dismiss in light of Twombly and Iqbal:

First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a “plausible claim for relief.”

Id. at 210-11, quoting Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. The Court explained, “a complaint must do more than allege the plaintiffs entitlement to relief. A complaint has to ‘show’ such an entitlement with its facts.” Id., citing Phillips v. Cnty. of Allegheny, 515 F.3d 224, 234-35 (3d Cir.2008). “[WJhere the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged - but it has not ‘show[n]’ - ‘that the pleader is entitled to relief.’ ” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937, quoting Fed. R. Civ. P. 8(a)(2).

II. Rule 9(b)

Federal Rule of Civil Procedure 9(b) requires that “[i]n alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.” To satisfy the “particularity” requirement of 9(b) at the pleadings stage, an FCA claimant may identify “particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.” Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 155-56 (3d Cir.2014) (internal citations omitted). An FCA claimant is not required to show “the exact content of the false claims in question” to survive a motion to dismiss., as “requiring this sort of detail at the pleading stage would be ‘one small step shy of requiring production of actual documentation with the complaint, a level of proof not demanded to win at trial and significantly more than any federal pleading rule contemplates.’” Foglia, 754 F.3d at 156. quoting U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 190 (5th Cir.2009).

DISCUSSION

Dr. Polansky, a private individual, has brought this suit as a qui tam relator on behalf of the government to enforce several provisions of the FCA. 31 U.S.C. § 3730(b). On May 20, 2009, Congress enacted the Fraud Enforcement Recovery Act (FERA), Pub. L. No. 111-21, 123 Stat. 1617 (2009), which amended the FCA. Relator alleges violations of post-FERA section 3729(a)(1)(A) and pre-FERA section 3729(a)(1) for knowingly presenting or causing the submission of false claims to the government. Relator also alleges violations of post-FERA section 3729(a)(1)(B) and pre-FERA section 3729(a)(2) for making or using a false record or statement that is material to a false claim or to get a false claim paid by the government.

To state a claim under section 3729(a)(1) both pre- and post-FERA, a party must allege that “(1) the defendant presented or caused to be presented to an agent of the United States a claim for payment; (2) the claim was false or fraudulent; and (3) the defendant knew the claim was false or fraudulent.” U.S. ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 242 (3d Cir.2004), Pre-FERA, a party had to plead these same elements to pursue a claim under FCA section 3729(a)(2), in addition to pleading “that the defendant made or used (or caused someone else to make or use) a false record in order to cause the false claim to be actually paid or approved.” Id. Post-FERA, section 3729(a)(1)(B) requires a plaintiff to plead that a defendant knowingly made, used or caused to be made or used “a false record or statement material to a false or fraudulent claim.”

Defendants have filed three motions to dismiss in the following groups: 1) defendant EHR (Dkt. No. 52, Ex. A); 2) defendants YNHH and CHOMP (Dkt. No. 54, brief at Dkt. No. 90); and 3) defendants UHG, UHCS, Optum and Optumlnsight (Dkt. No. 51). Defendants all file their motions to dismiss under Federal Rules of Civil Procedure 12(b)(6) and 9(b) for failure to state a claim upon which relief can be granted and failure to plead fraud with particularity. Relator filed two briefs in opposition (Dkt. No. 62, attached briefs), arguing that he has pled sufficient facts to state a claim against each defendant and that the fraudulent scheme he alleges is sufficient to survive the heightened pleading standards of Rule 9(b). Defendant EHR filed a reply brief (Dkt. No. 78), YNHH and CHOMP filed a reply brief (Dkt. No. 89) and UHG and its subsidiaries filed a reply brief (Dkt. No. 70). Finally, relator filed a sur-reply brief responding to all defendants (Dkt. No. 84). I will address each of the three motions below.

I. Defendant EHR

EHR has moved to dismiss all of relator’s counts against it for failure to plead causation with particularity, failure to state a claim in alleging falsity, failure to adequately plead state law claims under both Rule 9(b) and 12(b)(6), failure to state a claim for EHR’s appeals of client claim denials and- failure to state a claim in alleging knowledge. Relator maintains that he has provided full and detailed allegations against EHR to survive its motion under both Rule 9(b) and Rule 12(b)(6). For the following reasons, I will grant in part and deny in part EHR’s motion.

A. 9(b)

EHR argues that relator has failed to plead causation with particularity and that relator’s state law claims are not pled with particularity. Relator maintains that he has pled causation with particularity and that his state law claims allege a nationwide scheme with sufficient particularity.

1. Causation

EHR contends that relator has failed to plead fraud with particularity by failing to adequately plead the element of causation. The Court of Appeals has explained that to satisfy Rule 9(b)’s particularity requirement at the pleadings stage, an FCA claimant may identify “particular details of a scheme to submit, false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted.” Foglia v. Renal Ventures Mgmt., LLC, 754 F.3d 153, 155-56 (3d Cir.2014) (internal citations omitted). An FCA claimant need not plead “the exact content of the false claims in question” to survive a motion to dismiss based on Rule 9(b). Id. at 156. Relator argues that he has alleged many particular details of EHR’s scheme to cause medical providers to submit claims that fraudulently fail to comply with applicable regulations.

EHR argues that relator “disregards the central role the attending physician plays in deciding whether to admit a patient and bill for inpatient services and, thereby, fails to plead that EHR caused the submission of false claims.” Dkt. No. 52, Ex. A at 20. EHR argues that because certain regulations state that a patient’s physician should make the ultimate determination about a patient’s admissions status, EHR’s reviews cannot cause the submission of false claims. Id. at 21-22. EHR argues that relator has failed to allege the required “nexus between EHR’s recommendation and the attending physician’s decision to order an inpatient admission” because relator “fails to plead sufficient facts showing how EHR fraudulently causes attending physicians to order an inpatient admission.” Id. at 21, 23. EHR also contends that relator “does not plausibly allege why attending physicians across the nation (who are not employed by or compensated by EHR or hospitals) would be motivated to accept EHR’s allegedly fraudulent second-guessing of their clinical judgment.” Id. at 24.

Relator argues that he has alleged that EHR’s inpatient certifications were “routinely the determinative factor in causing false claims for inpatient hospital care to be submitted.” Dkt. No. 62, ReL’s Br. Opp. EHR, YNHH and CHOMP at 53. Relator argues that contrary to EHR’s assumed review sequence of “physician order, first level review using [internal review] criteria, and finally the second level review by EHR,” he has alleged how “the process is not nearly so rigid, that treating physicians’ orders often follow the hospitals’ first level and second level review and moreover, that EHR regularly interacts with the treating physician to have the original order changed to make it consistent with EHR’s certification.” Id at 55.

Indeed, relator has made detailed allegations regarding EHR’s critical role in its clients’ admission status review processes. Relator contends that “hospitals are required to undertake their own assessment — separate and apart from whatever the individual treating physicians may or may not order — of whether the services they provide should be” billed as inpatient or outpatient. Id. at 56. As part of their mandated review process, relator alleges that “[m]ost of EHR’s hospital clients retain it to perform a second level review of all cases that fail [internal review criteria] for inpatient status.” Dkt. No. 12 at ¶ 106. In the review process, relator contends that hospitals “essentially delegate utilization review of cases that fail inpatient criteria to EHR rather than perform the reviews in-house.” Id. Relator alleges that EHR promotes itself as the national expert about hospital admissions determinations and “goes to great lengths to cause hospitals to believe that [them internal review criteria] are extremely inaccurate, and thereby cause a significant volume of inpatient cases to be inappropriately billed as outpatient.” Id. at ¶¶ 85-87.

EHR allegedly “asserts that it is difficult to get physicians to correctly assign patient status determinations” to validate EHR’s own determinations as based in the proper regulatory framework and advises doctors that they “don’t need to understand the nuances and the rules.” Id. at ¶ 91-92. Relator summarizes the relationship between EHR and its hospital clients by alleging that:

[i]n almost every instance, when the hospital client submits for payment the Medicare and Medicaid claims that EHR has reviewed and certified for inpatient status, it adopts that inpatient billing status determination notwithstanding the fact that the hospital’s first level review has typically determined that outpatient status with observation services was appropriate and sometimes, the attending physician did as well. Indeed, as EHR explains to clients and prospective clients, when EHR reaches an inpatient decision that differs from the decision of the attending physician, EHR and the hospital case managers are generally successful in obtaining a new order from the physician that is consistent with EHR’s decision. Thus, for virtually all cases it reviews, EHR’s inpatient certification is determinative of the billing status that the hospital submits to the Government Payers. EHR provides tracking reports to hospitals to ensure that hospital status orders match the certifications.

Id. at ¶ 115 (emphasis in original). Relator argues that these allegations show that regardless of whether the initial physician ordered inpatient or outpatient status or made no order until after EHR’s review, “hospitals do not rely upon the treating physicians to decide inpatient vs. outpatient billing status.” Dkt. No. 62, Rel.’s Br. Opp. EHR, YNHH and CHOMP at 57, citing Dkt. No. 12 at ¶ 106. Relator also provides numerous allegations of specific cases in which EHR’s involvement allegedly led its clients to bill for false claims. See, e.g„ Dkt. No. 12 at ¶¶ 164-65, 191-92, 195-96,198.

EHR cites In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235 (3d Cir.2012), to support its argument that relator fails to adequately plead causation. In Schering Plough, the Court of Appeals affirmed a finding below that the plaintiffs in a racketeering case lacked standing because the plaintiffs failed to establish a causal link between their off-label drug purchases and the defendants’ alleged unlawful misrepresentations. 678 F.3d at 248, 253. However, in the FCA context, the Court of Appeals has found that even when one party may make “its own decision to file a false certification, this is not inconsistent with a conclusion that [another party] caused that filing” when the latter party’s scheme was a “substantial factor in bringing about” the false filings. U.S. ex rel. Schmidt v. Zimmer. Inc., 386 F.3d 235, 244 (3d Cir.2004).

Relator argues that he has alleged that EHR was “not just a substantial factor but routinely the determinative factor in causing false claims for inpatient hospital care to be submitted.” Dkt. No. 62, ReL’s Br. Opp. EHR, YNHH and CHOMP at 53. Relator relies on a number of cases in the FCA context to support his contention. See id. at 53 n.23, citing, e.g., Schmidt, 386 F.3d at 244 (finding that the relator sufficiently pled causation where the defendant allegedly marketed and implemented a kickback scheme targeting health care providers who then submitted claims without disclosing the kickbacks); U.S. ex rel. Bates v. Dentsply Int’l. Inc., No. 12-7199, 2014 WL 4384503, at *8 (E.D.Pa. Sept. 4, 2014) (same). I agree that relator’s detailed and specific allegations of EHR’s role within the hospital review process and its influence on its clients’ final billing decisions are sufficient to plead causation.

2. State law claims

EHR also seeks to dismiss relator’s claims against it under state laws analogous to the FCA. Relator argues that he has sufficiently alleged claims under the laws of twenty-seven states and the District of Columbia to survive EHR’s motion to dismiss.

EHR argues that relator has failed to “plead with specificity conduct in most of the states and commonwealths on whose behalf he purports to sue.” Dkt. No. 52, Ex. A at 25. EHR contends that relator has only alleged specific conduct in California, Connecticut, New York and Massachusetts but has failed to make any particularized allegations against EHR relating to state Medicaid programs in any of the other states or the District of Columbia. Id. EHR relies on one case to support its argument, Dentsply, which found that the plaintiffs “conclusory” allegations about the defendant’s scheme failed to allege “location-specific” facts in certain states. 2014 WL4384503, at *10-11.

Relator argues that he has alleged a nationwide scheme and should not be required to plead specific facts in every state in order to pursue his claims. Dkt. No. 62, Rel.’s Br. Opp. EHR, YNHH and CHOMP at 66-67. Relator notes that he has alleged dozens of specific hospitals around the country to be EHR clients and that EHR provides review services for over half of the country’s hospitals. Id. Relator relies on U.S. ex rel. Brown v. Celgene Corp., No, 10-3165, 2014 WL 3605896, at *10 (C.D.Cal. July 10, 2014), where the Court allowed a relator’s state FCA claims to proceed because the relator’s complaint made “allegations about [the defendant’s] nationwide, systemic practices, not [state]specific allegations.” The Court in Celgene noted that there was “no reason to conclude that [the defendant’s] alleged misconduct was limited to” one state. Id.

Relator’s alleged nationwide scheme is factually closer to the scheme in Celgene than in Dentsply. While the alleged scheme in Celgene was a uniform nationwide marketing and kickback scheme, 2014 WL 3605896, at *1, the kickback scheme in Dentsply involved specific “rewards and incentives” that varied by the medical provider the defendant targeted, from free trips abroad, equipment or meals to free tickets, baseball games or promotion of a specific doctor’s course, 2014 WL 4384503, at *2-5. See also U.S. ex rel. Spay v. CVS Caremark Corp., 913 F.Supp.2d 125, 177 (E.D.Pa.2012) (“Certainly, Plaintiff cannot be expected to plead with particularity each and every false claim nationwide without the benefit of at least some discovery, as such information rests solely within Defendants’ control.”). At this stage, relator has alleged the nationwide scope of EHR’s scheme with sufficient particularity.

B. 12(b)(6)

EHR argues that relator has failed to state a claim under Rule 12(b)(6) by failing to adequately plead knowledge and falsity. EHR also argues that relator’s claims based on EHR’s appeals of client hospital claims and relator’s state law claims are insufficiently pled. Relator maintains that he has sufficiently pled all of the elements required by the FCA for all of his claims against EHR.

1. Falsity

EHR’s first argument under Rule 12(b)(6) is that relator has not pled falsity. Dkt. No. 52, Ex. A at II. EHR asserts that “[ejxpressions of opinion, scientific judgments or statements as to conclusions which reasonable minds may differ cannot be false,” Id. quoting U.S. ex rel. Hill v. Univ. of Med. & Dentistry of New Jersey, 448 Fed.Appx. 314, 316 (3d Cir.2011). EHR characterizes its second level case review process just the kind of “complex medical judgment” that CMS regulations outline. Dkt. No. 52, Ex. A at 13. EHR argues that its approach to case review involves a “reasonable interpretation of Medicare guidelines” so that the claims it certifies cannot be false. Id. at 16.

Relators may pursue FCA claims under either a theory of factual falsity or legal falsity. U.S. ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 305 (3d Cir.2011). A claim is factually false when “the claimant misrepresents what goods or services that it provided to the Government.” See id.; In re Genesis Health Ventures. Inc., 112 Fed.Appx. 140, 143 (3d Cir.2004).

In contrast, “[a] legally false FCA claim is based on a ‘false certification’ theory of liability.” Wilkins, 659 F.3d at 305. A claim is legally false when “the claimant knowingly falsely certifies that it has complied with a statute or regulation the compliance with which is a condition for Government payment.” See id.

Legally false certifications can be express or implied. Id An express false certification is when a claimant falsely certifies that “it is in compliance with regulations which are prerequisites to Government payment in connection with the claim for payment of federal funds.” Id. Implied false certification is a broader theory of liability, where a claimant makes a claim “without disclosing that it violated regulations that affected its eligibility for payment.” Id at 305-06. A relator relying on an implied false certification theory “must show that if the Government had been aware of the defendant’s violations of the Medicare laws and regulations that are the bases of a plaintiff’s FCA claims, it would not have paid the defendant’s claims.” Id. at 307.

a. Factual Falsity

Relator argues that he has sufficiently pled that “EHR caused hospitals, including YNHH and CHOMP, to submit bills for inpatient services that were factually false.” Dkt. No. 62, ReL’s Br. Opp. EHR, YNHH and CHOMP at 69. Relator contends that the bills hospitals submitted after review by EHR were factually false because “claims for reimbursement for inpatient services are false on their face or literally false — the bills indicate that the beneficiaries who receive the services are inpatient status when in fact they do not meet Medicare and Medicaid’s inpatient requirements and therefore should instead be classified as outpatient hospital status.” Dki.No. 84 at 15.

Relator argues that “by mischaraeteriz-ing their services as inpatient in order to obtain higher reimbursements, [hospitals] overcharged the government for their services” through EHR’s certifications, comparing his allegations to those in Foglia. Id. However, in Foglia. where the relator’s claim was “best understood as a factually false claim,” the relator alleged a scheme in which the defendant overbilled the government for vials of medication intended to be used only a single time but actually harvested the leftover medication in the vials to use for other patients. 754 F.3d 153, 157 (3d Cir.2014) (internal quotation marks omitted). The relator in Foglia therefore alleged a factually false scheme in which the defendant misrepresented the goods or services that it provided to the government by using the leftover medication. Id. at 157-58.

Here, in contrast, relator has repeatedly alleged that patients receive the same services whether they are billed as inpatients or outpatients. Relator alleges that “[w]hether a hospital classifies a Medicare or Medicaid patient as an outpatient receiving observation services or as an inpatient is a choice that pertains solely to billing, not to the scope or intensity of care which the patient receives.” Dkt. No. 12 at ¶ 127. Relator contends that:

[f]or each patient, the same tests and treatments are administered, the same nursing care is given, and the same bed and board are provided in the outpatient setting as would be administered in the inpatient setting. The difference lies in how the Government Payer is billed, and the hospital is paid.

Id. at ¶ 128. In either an inpatient or outpatient setting, relator maintains that a “patient can expect to have the same tests performed to help assess and reassess his/ her condition that would be performed if he/she were admitted as an inpatient.” Id. at f 125. Relator alleges that “[t]he scope and intensity of care patients receive from hospital [outpatient] observation services will generally be indistinguishable from the care he or she would receive if classified as a hospital inpatient.” Id. at ¶ 128.

At no point does relator allege that EHR caused hospitals, including YNHH and CHOMP, to seek reimbursement for goods or services which they failed to provide, or where they misrepresented the goods or services they provided to patients. For example, relator does not allege that EHR caused hospitals to “submit[ ] a claim for cardiac bypass surgery when only an EKG was performed” or “submit[ ] claims for services rendered to fictitious patients.” U.S. ex rel. Colucci v. Beth Israel Med. Ctr., 785 F.Supp.2d 303, 314 (S.D.N.Y.2011), aff'd sub nom. Colucci v. Beth Israel Med. Ctr., 531 Fed.Appx. 118 (2d Cir.2013).

Instead, relator’s theory of falsity is grounded in the billing rate that EHR certified was appropriate for hospitals regarding services that relator does not contest were provided. See Colucci, 785 F.Supp.2d at 314 (holding that the relator could not proceed on a theory of factual falsity for an alleged overbilling scheme when the relator’s “quarrel appeared] to be with the rates used by [the defendant] in its claimed reimbursements, not the factual basis for those claims”) (emphasis in original). Relator’s allegations of improper billing are grounded in violations of regulatory requirements, not in any actual false representations of the services the hospitals provided to their patients for each bill they submitted, since relator has alleged that there is no difference in the level, quality or scope of care. See U.S. ex rel. Wall v. Vista Hospice Care. Inc., 778 F.Supp.2d 709, 718-19 (N.D.Tex.2011) (finding that the relator could not proceed on a factual falsity theory where the defendant “allegedly submitted inaccurate claims for hospice services because the patients were ineligible for hospice, based on the hospice eligibility statute,” not because the bills incorrectly described what hospice services were provided or sought reimbursement for hospice services that were never provided). Therefore, I find that relator has not stated an FCA claim under a factually false theory.

b. Legal Falsify

Relator primarily relies on a theory of legal falsity to allege liability, arguing that EHR’s certifications led hospitals to bill for services in violation of standards in regulations and government manuals. See Dkt. No. 62, Rel.’s Br. Opp. EHR, YNHH and CHOMP at 35, 70-71. EHR questions relator’s interpretation of CMS’ guidance, arguing that relator has failed to plead objective falsity because its physician ad-visors make “complex medical judgments about which reasonable minds may differ and which ... [are] based on a reasonable interpretation of the applicable regulations and guidelines.” Dkt. No. 52, Ex. A at 13. Defendants YNHH and CHOMP also address the falsity of relator’s claims, arguing that relator fails to state a claim because none of the regulations and manuals relator relies on constitute conditions of payment. Dkt. No. 90 at 41-43.

Relator alleges that EHR knowingly caused hospitals including YNHH and CHOMP to falsely certify that they were in compliance “with a statute or regulation the compliance with which is a condition for Government payment.” See Wilkins, 659 F.3d at 305. Courts have distinguished conditions of government payment for a claim from conditions of participation in a government program. Id. at 309. Conditions of participation “are enforced through administrative mechanisms, and the ultimate sanction for violation of such conditions is removal from the government program, while [conditions of payment are those which, if the government knew they were not being followed, might cause it to actually refuse payment.” Id at 309, citing U.S. ex rel. Conner v. Salina Reg’l Health Ctr., Inc., 543 F.3d 1211, 1220 (10th Cir.2008) (internal quotation marks omitted). Relator argues that he can rely on several conditions of payment with supporting statutes, regulations and manuals with which he claims defendants failed to comply. See Dkt. No. 62, ReL’s Br. Opp. EHR, YNHH and CHOMP at 71.

Relator primarily argues in support of one theory of implied false certification. He contends that CMS’ standards for inpatient status located in its Medicare Benefit Policy Manual constitute a condition of payment that defendants violated when they submitted claims that should have been billed as outpatient status claims. Id. at 35, 71. The Medicare Benefit Policy Manual, CMS Pub. 100-02, ch. 1 § 10 — an informal guidance manual by CMS — provides the following guidance on inpatient determinations:

An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. Generally, a patient is considered an inpatient if formally admitted as inpatient with the expectation that he or she will remain at least overnight and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a hospital bed overnight.

The physician or other practitioner responsible for a patient’s care at the hospital is also responsible for deciding whether the patient should be admitted as an inpatient. Physicians should use a 24-hour period as a benchmark, i.e., they should order admission for patients who are expected to need hospital care for 24 hours or more, and treat other patients on an outpatient basis. However, the decision to admit a patient is a 'complex medical judgment which can be made only after the physician has considered a number of factors, including the patient’s medical history and current medical needs, the types of facilities available to inpatients and to outpatients, the hospital’s by-laws and admissions policies, and the relative appropriateness of treatment in each setting. Factors to be considered when making the decision to admit include such things as:

• The severity of the signs and symptoms exhibited by the patient;

• The medical predictability of something adverse happening to the patient;

• The need for diagnostic studies that appropriately are outpatient services (i.e., their performance does not ordinarily require the patient to remain at the hospital for 24 hours or more) to assist in assessing whether the patient should be admitted; and

• The availability of diagnostic procedures at the time when and at the location where the patient presents ,..

Claims processors and reviewing bodies rely on this guidance and, since October 1, 2013, accompanying regulations to review inpatient claims.

CHOMP and YNHH argue that the Medicare Benefit Policy Manual “does not expressly state that it creates conditions of payment” and thus that it cannot establish conditions of payment sufficient to support FCA liability. Dkt. No. 90 at 44. First, CHOMP and YNHH cite a case in which a relator failed to plead an off-label drug use scheme with sufficient specificity when relying on certain provisions of the Medicare Benefit Policy Manual. U.S. ex rel. Simpson v. Bayer Corp., No. 06-3895, 2014 WL 1418293, at *10 (D.N.J. Apr. 11, 2014). As relator points out, this case is distinguishable both because it refers to different provisions of the Medicare Benefit Policy Manual and because here, the relator does identify particular provisions with which defendants allegedly failed to comply. See Dkt. No. 62, ReL’s Br. Opp. EHR, YNHH and CHOMP at 72.

EHR, CHOMP and YNHH also rely on a case involving a different policy manual which “by its terms ... does not purport to address the physician’s decision to submit a claim for reimbursement” and did not dictate the particular requirement with which the plaintiff claimed the defendant was falsely certifying compliance. U.S. ex rel. Swafford v. Borgess Med. Ctr., 98 F.Supp.2d 822, 828 (W.D.Mich.2000), aff'd, 24 Fed.Appx. 491 (6th Cir.2001). Here too I agree with relator that this case is factually distinguishable because it discussed a different policy manual which was not routinely provided to physicians and in Swaf-ford the relator failed to “adduce[] any facts to support an inference that the physicians knew or believed these regulations to be applicable to their submissions.” See Swafford, 98 F.Supp.2d 822 at 828; Dkt. No. 62, ReL’s Br. Opp. EHR, YNHH and CHOMP at 72. In contrast, the provisions in the Medicare Benefit Policy Manual on which relator relies are intended for physicians and healthcare providers to use and are directly applicable to the inpatient/outpatient reimbursement distinction.

Defendants argue that relator’s theory of legally false certification “depends on his personal interpretation of Section 10 of the Policy Manual” and should therefore be disregarded because length of stay is not the only factor physicians may consider in determining a patient’s status, which involves a “complex medical judgment.” Dkt. No. 89 at 15; see Dkt. No. 52, Ex. A at 13. Relator counters with a series of Medicare Appeals Council decisions that discuss the importance of the requirements for inpatient admissions in the Medicare Benefit Policy Manual, but I need not depend on these decisions to find that the manual’s inpatient requirements function as a condition of payment.

Relator does not allege that EHR fails to consider length of stay as the only relevant factor in determining patient status in its certifications for hospitals. Relator alleges that EHR’s review process fails to consider several criteria in CMS guidance entirely, for thousands of cases, and instead systematically relies on a limited set of criteria that never considers length of stay or the need for and results of diagnostic testing, among other factors. See Dkt. No. 12 at ¶ 122 (alleging that “EHR exclusively focuses its review on patient