Medically unnecessary procedures are health care items and services that are not “reasonable and necessary for the diagnosis or treatment of illness or injury.”
The False Claims Act provides a mechanism for individuals to “blow the whistle” on instances of waste, fraud, or abuse for systemic unnecessary procedures in healthcare settings. Individuals who bring a successful claim are entitled to a percentage of the government’s recovery.
Federal law and regulations require any healthcare provider who provides services reimbursed by Medicare, Medicaid, or Tricare to ensure those services are “provided economically and only when, and to the extent, medically necessary.” CMS–1500 requires the billing entity to certify that, among other things, “the services on this form were medically necessary.”
The healthcare providers who determine whether a procedure is medically necessary are the treating doctors and reviewing physicians. A variety of different sources guide the determination of medical necessity, including state regulations and provider manuals, the Medicare benefit policy manual, and case law.
Perhaps the most helpful, and often cited, definition of medical necessity comes from the American Medical Association who defines medical necessity as:
Health care services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing or treating an illness, injury, disease or its symptoms in a manner that is:
(a) in accordance with generally accepted standards of medical practice;
(b) clinically appropriate in terms of type, frequency, extent, site, and duration; and
(c) not primarily for the economic benefit of the health plans and purchasers or for the convenience of the patient, treating physician, or other health care provider.
While what constitutes medical necessity is subjective, it remains a critical element for the provision and payment of healthcare in the United States. The subjective nature of the standard can make it difficult for whistleblowers to be successful. It can be difficult to pursue a False Claims Act case based on medically unnecessary procedures when the doctor made an unbiased judgment the procedures were necessary.
Typically, when these cases are successful, one of the following circumstances occurs:
- the medical procedures were being provided to patients when no doctor ordered the service;
- the healthcare provider falsified records to indicate the patient met the criteria for a procedure when they did not meet such criteria; or
- it was apparent the doctor did not have an unbiased opinion in recommending a procedure because he/she was receiving a kickback payment from another company who provided the service.
Despite the difficulty in proving these cases, medically unnecessary procedure cases can be successful. And when they are, they often result in significant recovery for the whistleblower.
For example, an urgent care provider paid $10 million to resolve allegations of medically unnecessary allergy tests. The whistleblower shared in an award of over $1.6 million. In another case, a dental management company paid $24 million to settle allegations of providing unnecessary procedures, such as root canals, for indigent children. The three whistleblowers who brought the lawsuit received over $2.4 million.
 42 USC 1395y(a)(1)(A).
 42 U.S.C. § 1320c-5(a)(1); 42 C.F.R. § 1004.10(a).
 H-320.953 (2016).
 Press Release, U.S. Dep’t of Justice, Arizona-based Nextcare Inc. to Pay US $10 Million to Resolve False Claims Act Allegations (July 2, 2012), available at https://www.justice.gov/opa/pr/arizona-based-nextcare-inc-pay-us-10-million-resolve-false-claims-act-allegations.
 Press Release, U.S. Dep’t of Justice, National Dental Management Company Pays $24 Million to Resolve Fraud Allegations (Jan. 20, 2010), available at https://www.justice.gov/opa/pr/national-dental-management-company-pays-24-million-resolve-fraud-allegations.