IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN ...€¦ · Resume (App. 037-40) and Plea...

i

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

UNITED STATES OF AMERICA, §

EX REL. PHI-NGA JEANNIE LE, §

§

Plaintiff, §

§

v. § Case No. 3:09-cv-02482-K

§

STANLEY THAW and §

MICHAEL KINCAID, §

§

Defendants. §

RELATOR’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Case 3:09-cv-02482-K Document 41 Filed 01/22/15 of 26 PageID 150

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TABLE OF CONTENTS

TABLE OF AUTHORITIES ......................................................................................................... iv

BACKGROUND ............................................................................................................................1

Dr. Le Alleged in Detail How Defendants Double-Billed Medicare and

Used an Improper Provider Identifier .....................................................................................3

The Criminal Case Followed Closely the Allegations in Dr. Le’s Complaint ......................5

LEGAL STANDARD ....................................................................................................................11

ANALYSIS ....................................................................................................................................11

Defendants’ are Precluded from Challenging the Essential Elements

of their Convictions, which factually Track Dr. Le’s Allegations ........................................14

Defendants Pled Guilty to Billing for Treatment Using the Provider

Number of a Physician Who Did Not Provide the Treatment .............................................15

Defendants Pled Guilty to Fraudulent Double Billing for HBOT

Sessions Using CPT Code 99183 ........................................................................................15

Dr. Le is Entitled to Summary Judgment as a Matter of Law .............................................16

FALSE CLAIMS ACT DAMAGES .............................................................................................18

CONCLUSION ..............................................................................................................................19

APPENDIX

(Documents from Criminal Case, U.S. v. Thaw and Kincaid, No. 3:12-CR-261-P (N.D. Tex.))

Indictment ..................................................................................................................... 001-18

Superseding Indictment ................................................................................................ 019-36

Thaw Factual Resume ................................................................................................... 037-40

Thaw Plea Agreement ................................................................................................... 041-47

Thaw Superseding Information..................................................................................... 048-55

Kincaid Plea Agreement ............................................................................................... 056-62

Kincaid Factual Resume ............................................................................................... 063-66


iii

APPENDIX (cont’d)

Kincaid Superseding Information ................................................................................. 067-74

Thaw Amended Plea Agreement .................................................................................. 075-82

Thaw Judgment ............................................................................................................. 083-88

Kincaid Judgment ......................................................................................................... 089-94


iv

TABLE OF AUTHORITIES

Cases

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ............ 11

Emich Motors Corp. v. General Motors Corp., 340 U.S. 558,

71 S.Ct. 408, 95 L.Ed. 534 (1951) ............................................................................................ 12

S.E.C. v. Gruenberg, 989 F.2d 977 (8th Cir. 1993) ...................................................................... 12

Thomas v. Can-Do, Inc., 74 F.3d 1236 (5th Cir. 1995) ................................................................ 12

Trevino v. Celanese Corp., 701 F.2d 397 (5th Cir. 1983) ............................................................ 11

United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180 (5th Cir. 2009).................................. 14

United States ex rel. Spicer v. Westbrook, 751 F.3d 354 (5th Cir. 2014) ..................................... 13

United States ex rel. Farmer v. City of Houston, 523 F.3d 333 (5th Cir. 2008) ........................... 14

United States ex rel. Longhi v. United States, 575 F.3d 458 (5th Cir. 2009) ............................... 13

United States v. Boutte, 907 F. Supp. 239 (E.D. Tex. 1995),

aff'd, 108 F.3d 332 (5th Cir. 1997) ............................................................................... 17, 18, 19

United States v. Freeman, 434 F.3d 369 (5th Cir. 2005) .............................................................. 12

United States v. Hayes, 574 F.3d 460 (8th Cir. 2009) .................................................................. 12

United States v. Hilliard, 578 F. App'x 439 (5th Cir. 2014) ......................................................... 12

United States v. Killough, 848 F.2d 1523 (11th Cir.1988) ........................................................... 17

United States v. Peterson, 244 F.3d 385 (5th Cir. 2001) .............................................................. 13

United States v. Szilvagyi, 398 F. Supp. 2d 842 (E.D. Mich. 2005) ............................................. 19

United States v. Thaw and Kincaid, No. 3:12-CR-261-P (N.D. Tex.)............................................ 2


v

Cases (cont'd)

United States v. Thomas, 709 F.2d 968 (5th Cir. 1983), cert. denied, 475 U.S. 1014 (1986) ...... 17

Statutes

18 U.S.C. § 1347 .................................................................................................................... passim

18 U.S.C. § 24 .............................................................................................................................. 7-8

18 U.S.C. § 3664 ........................................................................................................................... 19

18 U.S.C. § 371 ....................................................................................................................... 10, 12

18 U.S.C. § 1014 ............................................................................................................................. 2

18 U.S.C. § 1957 ............................................................................................................................. 2

31 U.S.C. §§ 3729-31 ............................................................................................................ passim

Rules

Fed. R. Civ. P. 56 .......................................................................................................................... 11

Regulations

28 C.F.R. § 85.3 ............................................................................................................................ 19

Medicare Claims Processing Manual, Publication #100-04 Chapters 1, 32. ............................ 4, 16


1

RELATOR’S MOTION FOR PARTIAL SUMMARY JUDGMENT

Plaintiff and relator Phi-Nga Jeannie Le moves the Court to enter summary judgment

against defendants Stanley Thaw and Michael Kincaid. Pursuant to the False Claims Act, 31

U.S.C. § 3731(e), defendants’ related convictions for conspiracy to commit health care fraud estop

them from “from denying the essential elements” of the False Claims Act violations asserted here.

Because defendants are precluded from contesting their civil liability in this action, Relator Le is

entitled to summary judgment as a matter of law.

In particular, Dr. Le seeks judgment on Counts I and III of her qui tam Complaint. Count I

asserts a cause of action under the False Claims Act (31 U.S.C. §§ 3729(a)(1) (1986) and

3729(a)(1)(A) (2009)) for the submission of false claims for payment to the United States. Count

III alleges a cause of action under the False Claims Act (31 U.S.C. §§ 3729(a)(3) (1986) and

3729(a)(1)(C) (2009)) for conspiracy to defraud the United States by getting a false claim paid.

BACKGROUND

On behalf of the United States, Relator Le filed her qui tam complaint on December 31,

2009 against defendants Stanley Thaw and Michael Kincaid.1 Dr. Le alleged that Thaw and

Kincaid, principals in a health care hyperbaric oxygen therapy (“HBOT”) provider, submitted false

claims to Medicare. Complaint (Dkt. 1) at ¶¶ 1, 10, 25-57. Dr. Le alleged that Thaw and Kincaid

defrauded Medicare by:

Double billing for HBOT sessions using CPT code 991832;

Billing for treatments using a the provider number of a physician who did not

1 The original complaint also asserted claims against defendants HBO2Works, LLC,

HBO2Works Houston, LLC, HBO2Works San Antonio, LLC, Cross Hyperbaric of Texas,

P.L.L.C. and PhyLogic Healthcare, LLC. Dr. Le voluntarily dismissed these defendants from the

case on June 6, 2014. Relator’s Notice of Partial Dismissal (Dkt. 32).

2 Current Procedural Terminology (CPT) prescribes a set of medical codes used to designate

services provided. The code(s) are submitted to Medicare and health care insurance companies for

reimbursement of those services.


mkrei_000

Rectangle

2

provide the treatment;

Billing for “evaluation & management” services that were not rendered;

Upcoding diagnostic studies; and

Billing for medically unnecessary services.

Id.

As a result of Dr. Le’s qui tam case, the Government initiated a criminal investigation and

pursued significant criminal charges against defendants Thaw and Kincaid. United States v. Thaw

and Kincaid, No. 3:12-CR-261-P (N.D. Tex.) (Solis, J.) (“Criminal Case”). As demonstrated

below, the criminal wrongdoing alleged by Thaw and Kincaid stemmed from and related directly

to the allegations made by Dr. Le.

The United States notified the Court on December 10, 2013 that it was not intervening in

the qui tam case. The Court ordered the Complaint unsealed and served on the defendants. Non-

Intervention Order (Dec. 12, 2013) (Dkt. 23).

In the Criminal Case, a sealed indictment as to defendants Stanley Thaw and Michael

Kincaid was first entered on September 6, 2012 and unsealed on September 11, 2012. Appendix

(“App.”) 001-18. In January 2013, a superseding indictment charged the defendants with one

count of conspiracy to commit health care fraud (18 U.S.C. § 1347), five counts of health care

fraud (18 U.S.C. §§ 1347 and 2), three counts of making a false statement to a financial institution

(18 U.S.C. §§ 1014 and 2), and three counts of engaging in monetary transaction in property

derived from specified unlawful activity (18 U.S.C. §§ 1957(a) and 2).3 App. 019-36. A Factual

Resume (App. 037-40) and Plea Agreement (App. 041-47) as to Thaw were filed on July 23, 2013,

a Superseding Information (App. 048-55) followed on July 24, 2013, and an Amended Plea

3 The counts relating to making a false statement to a financial institution and engaging in a

monetary transaction in property were unrelated to the allegations of health care fraud.


3

Agreement (App. 075-82) was filed on July 30, 2013. A Factual Resume (App. 063-66), Plea

Agreement (App. 056-62) and Superseding Information (App. 067-74) relating to defendant

Kincaid were filed on July 26 and 29, 2013. The Court imposed judgment against defendants Thaw

(App. 083-88) and Kincaid (App. 089-94) on June 5, 2014, sentencing them to five years in prison

and ordering them to pay, jointly and severally, $1,503,442.45 in restitution to the United States

and private insurers.4

Dr. Le Alleged in Detail How Defendants Double-Billed

Medicare and Used an Improper Provider Identifier

The United States’ criminal case focused on Dr. Le’s allegations that the defendants

fraudulently double-billed Medicare using CPT code 99183 for two HBOT sessions when only

one had occurred and submitted false claims using an improper physician identifier. In her

Complaint, Dr. Le explained how defendants submitted false claims using code 99183:

23. Medicare also covers the professional component of a HBOT dive,

which includes payment to the physician for attendance at and supervision of the

treatment. The physician’s work includes readying the patient for the dive, the

supervision and attendance during the dive, and the immediate and related routine

post-dive work. CPT code 99183 provides for physician billing for this service,

which is not time-based. As a result, the professional component is billed per HBOT

session, regardless of how long the treatment takes. In summary, one session

consists of compression, “bottom time,” and decompression.

29. Beginning with the opening of HBO2Works, LLC, in 2004,

HBO2Works Houston, LLC, in 2008, and HBO2Works San Antonio, LLC, in

2009, and upon information and belief, continuing to the present, the defendants

submitted false claims for physician services for two sessions of HBOT when only

one session was provided.

31. CPT code 99183 provides for physician attendance and supervision

of HBOT on a per session basis. See Medicare Claims Processing Manual,

Publication #100-04 Chapter 32, 30.1. CPT code 99183 is not a time-based code

and, therefore, may be submitted only once per session regardless of the session’s

4 Thaw and Kincaid are currently serving their sentences, incarcerated at the Federal

Bureau of Prisons correctional facility in El Reno, Oklahoma.


4

length.

35. Kincaid met with Dr. Le twice in November 2008 regarding the

coding on the Doctor Charge Sheets. Kincaid stated that Dr. Le was not consistently

submitting CPT code 99183 twice per session, and he instructed Dr. Le to use this

code twice per session of HBOT by placing “X 2” beside the CPT code. Kincaid

told Dr. Le that CPT code 99183 should be billed twice for two reasons: 1) the

Houston chamber was a multiplace chamber and “multiplace chambers are two

hours,” and 2) “per session is per hour” so HBOT sessions longer than one hour

required billing CPT code 99183 twice. Kincaid insisted that the use of CPT code

99183 twice per session was correct, that Thaw had approved this practice, and it

was routinely done at the Hurst facility.

36. Dr. Le confronted Kincaid about this practice during the last week

in November 2008 shortly before her resignation. Dr. Le asked Kincaid for

documentation to support the practice of billing CPT code 99183 twice per session

of HBOT. Kincaid stated that this was “how we do it.” When Dr. Le persisted,

Kincaid stated he would provide the documentation, but the following day Kincaid

stated he could not obtain the documentation from [billing company] PhyLogic

because his contact person was out of town.

37. For each single HBOT dive, the defendants routinely billed

Medicare for physician supervision of two sessions of HBOT using CPT code

99183. . . .

38. The defendants’ submission of false claims for physician

supervision using CPT code 99183 twice doubled their reimbursement for the

professional component of the dive.

Complaint (Dkt. 1). She also alleged that defendants submitted false claims by misidentifying the

treating physician on claims submitted to Medicare:

55. The defendants falsely submitted claims for Dr. Le’s treatment of

patients at the Houston facility using Dr. Thompson’s NPI [National Provider

Identifier] number.

56. Each physician performing services for a patient must be identified on

the claim form by his or her NPI number. See Medicare Claims Processing Manual,

Publication #100-04 Chapter 1, 30.2.13. The NPI is a unique identification number

for covered health care providers and must be used on claim form submissions. In

violation of Medicare regulations Dr. Le’s NPI number was not used. By using the

incorrect NPI number, defendants falsely identified Dr. Thompson as the treating

physician, when, in fact, the patients were treated by Dr. Le.

57. Thaw and Kincaid used Dr. Thompson’s NPI number for services Dr.

Le provided at the Houston facility. PhyLogic submitted the claims for HBOT


5

provided by defendants at both the Hurst and Houston facilities. It was aware that

two different physicians in separate cities were providing services simultaneously.

In spite of this, PhyLogic knowingly submitted the claims for treatment performed

by Dr. Le using Dr. Thompson’s NPI number.

Id.

The Criminal Case Followed Closely the Allegations in Dr. Le’s Complaint

The charging documents relating to each defendant from the Criminal Case are virtual

identical and mirror Dr. Le’s allegation regarding double billing of code 99183 and use of a false

provider number. The facts alleged in the Factual Resume for each defendant are near duplicates,

except for a few allegations pertinent to the individual. Thaw Factual Resume, App. 037-40;

Kincaid Factual Resume, App. 063-66. The stipulated facts in the defendants’ Factual Resumes

state:

Kincaid Factual Resume

App. 063-65

Thaw Factual Resume

App. 037-39 Beginning in January 2008 and

continuing through June 2011, in the Dallas

Division of the Northern District of Texas,

Michael Kincaid knowingly, intentionally,

and willfully conspired with Stanley Thaw

and others to defraud and obtain money from

Medicare, by means of materially false and

fraudulent pretenses, representations, and

promises, in connection with payments of

HBOT services and items.

Kincaid and his co-conspirators

accomplished the purposes of their scheme to

defraud by submitting claims for

reimbursement to Medicare that falsely

represented that physicians, who worked for

the companies owned and operated by

Kincaid and Thaw, had supervised and

attended multiple HBOT sessions/dives for

patients each day, when the physician, in fact,

had not, and only supervised and attended a

patient’s single HBOT session/dive each day.

Kincaid and his co-conspirator continued

Beginning in January 2008 and continuing

through June 2011, in the Dallas Division of

the Northern District of Texas, Stanley Thaw

knowingly and willfully conspired with

Michael Kincaid and others to defraud and

obtain money from Medicare and other health

care benefit programs, by means of materially

false and fraudulent pretenses, representations,

and promises, in connection with payments of

HBOT services and items.

Thaw and his co-conspirators

accomplished the purposes of their scheme to

defraud by submitting claims for

reimbursement to Medicare that falsely

represented that physicians, who worked for

the companies operated by Thaw and Kincaid,

had supervised and attended multiple HBOT

sessions/dives for patients each day, when the

physician, in fact, had not, and only supervised

and attended a patient’s single HBOT

session/dive each day.

* * *

Thaw and his co-conspirators were told on


6

The Superseding Information for each defendant alleges one count of conspiracy to commit

health care fraud (18 U.S.C. § 1347). Thaw Superseding Information, App. 048-53; Kincaid

Superseding Information, App. 067-74. The language used to describe the conspiracy is nearly

identical. Defendants’ Superseding Informations also parallel Dr. Le’s allegations regarding CPT

code 99183. In fact, Paragraph 20 refers to a letter Dr. Le wrote to defendants complaining about

their billing practices. The Superseding Informations state:

Kincaid Superseding Information

App. 070-74

Thaw Superseding Information

App. 051-55

11. Person A5 did not treat any patients and

was not involved in the business of Cross

Hyperbaric of Texas PLLC or any of the

Various HBO2Works companies. Michael

Kincaid and his co-conspirator paid Person A

for use of his Medicare provider number to seek

reimbursement from Medicare. Person A

allowed Michael Kincaid and his co-conspirator

to submit the application to Medicare on his

behalf, as well as sign his name to all Medicare

11. Person A did not treat any patients and

was not involved in the business of Cross

Hyperbaric of Texas PLLC or any of the

various HBO2Works companies. Stanley

Thaw and his co-conspirator paid Person A to

use his Medicare provider number to seek

reimbursement from Medicare. Person A

allowed Stanley Thaw and his co-conspirator

to submit the application to Medicare on his

behalf, as well as sign his name to all Medicare

5 “Person A” is Dr. John Paul Thompson, referenced by Dr, Le in paragraphs 55-57 of her

Complaint. See, supra, at 5.

to direct claims be submitted to Medicare and

other health care benefit programs containing

multiple CPT codes 99183 through at least

June 2011. Kincaid and his co-conspirators

were told on multiple occasions that billing

for multiple dive sessions was improper and

that they had overbilled Medicare in relation

to such sessions. On one occasion, a health-

care consultant, who had performed a review

of the companies affiliated with Kincaid, told

Kincaid and Thaw that billing for multiple

dive sessions was improper and that they had

overbilled Medicare in relation to such

sessions. Nevertheless, Kincaid and Thaw

continued to direct fraudulent claims to be

submitted to Medicare and other health care

programs through at least June 2011.

multiple occasions that billing for multiple

dive sessions was improper and that they had

overbilled Medicare in relation to such

sessions. On one occasion, a health-care

consultant, who had performed a review of the

companies for the purpose of providing a

proposal for medical billing Thaw as affiliated

with [sic], told Thaw and Kincaid that they

should bill only once for 99183 as opposed to

billing twice for 99183. Thaw and Kincaid did

not refund the money as they were advised to

do. Instead, Thaw and Kincaid continued to

direct fraudulent claims to be submitted to

Medicare and other health care programs

through at least June 2011


7


App. 070-74


App. 051-55

documents relating to Cross Hyperbaric of

Texas, PLLC or the HBO2Works companies.

Cross Hyperbaric of Texas, PLLC;

HBO2Works, LLC; HBO2Works Houston,

LLC; and HBO2Works San Antonio all used

Various billing agents to submit claims for

reimbursement to Medicare and other health

care benefit programs, but at all times, Michael

Kincaid and his co-conspirator instructed each

billing agent which CPT and diagnoses codes

were to be submitted to Medicare and other

federal health care benefit programs for

reimbursement.

12. Beginning on or about January 2008 and

continuing through at least on or about June

2011, in the Dallas Division of the Northern

District of Texas, and elsewhere, the defendant,

Michael Kincaid and his co-conspirator, did

knowingly, intentionally, and willfully

combine, conspire, confederate‚ and agree with

each other and with other persons, to commit

certain offenses against the United States, that

is, to knowingly and willfully execute, and

attempt to execute, a scheme and artifice: (a) to

defraud Medicare; and (b) to obtain money and

property owned by and under the custody and

control of Medicare, by means of materially

false and fraudulent pretenses, representations,

and promises, in connection with payments for

health care Services, namely HBOT-related

items and services‚ in violation of 18 U.S.C. §

1347.

13. It was part of the conspiracy that

Michael Kincaid, his co-conspirator, and others,

would and did unlawfully enrich themselves by:

(a) submitting false and fraudulent claims to

Medicare for HBOT-related items and Services;

and (b) concealing from Medicare the nature

and existence of the conspiracy.

documents relating to Cross Hyperbaric of

Texas, PLLC or the HBO2Works companies.

Cross Hyperbaric of Texas, PLLC;

HBO2Works, LLC; HBO2Works Houston,

LLC; and HBO2Works San Antonio all used

various billing agents to submit claims for

reimbursement to Medicare and other health

care benefit programs, but at all times, Stanley

Thaw and his co-conspirator instructed each

billing agent which CPT and diagnoses codes

were to be submitted to Medicare and other

federal health care benefit programs for

reimbursement.

12. Beginning on or about January 2008 and

continuing through at least on or about June

2011, in the Dallas Division of the Northern

District of Texas, and elsewhere, the

defendant, Stanley Thaw and his co-

conspirator, did knowingly, intentionally, and

willfully combine, conspire, confederate, and

agree with each other and with other persons,

to commit certain offenses against the United

States, that is, to knowingly and willfully

execute, and attempt to execute, a scheme and

artifice: (a) to defraud Medicare and other

health care benefit programs as defined in 18

U.S.C. § 24(b); and (b) to obtain money and

property owned by and under the custody and

control of Medicare and other health care

benefit programs as defined in 18 U.S.C. §

24(b), by means of materially false and

fraudulent pretenses, representations, and

promises, in connection with payments for

health care services, namely HBOT-related

items and services, in violation of 18 U.S.C. §

1347.

13. It was part of the conspiracy that Stanley

Thaw his co-conspirator, and others, would

and did unlawfully enrich themselves by: (a)

submitting false and fraudulent claims to

Medicare and other health care benefit

programs as defined in 18 U.S.C. § 24(b) for

HBOT-related items and services; and (b)


8


App. 070-74


App. 051-55

15. From on or about January 2008 and

continuing to June 201l, Michael Kincaid and

his co-conspirator engaged in a scheme to

defraud Medicare by causing the Submission of

claims for reimbursement for physician

Supervision and attendance under CPT code

99183 that falsely represented to Medicare that

the physician supervised and attended multiple

HBOT sessions/dives for patients each day,

when that physician in fact had not, and only

supervised and attended a patient's single

HBOT session/dive each day.

17. On or about January 2008, Michael

Kincaid and his co-conspirator retained a

Dallas-area health care consultant to perform a

review of their company's billing and

collections agent. On or about January 24, 2008,

the consultant met with and provided to Michael

Kincaid and his co-conspirator a written report

clearly stating CPT code 99183 was not time-

based, and could only be submitted to Medicare

once per each HBOT session/dive. The written

report given to Michael Kincaid and his co-

conspirator also informed them that due to the

sheer number of improper CPT code 99183

services billed to Medicare, their companies had

been significantly overpaid, and it needed to

refund those payments.

18. Michael Kincaid and his co-conspirator

continued the practice of causing claims with

multiple numbers of CPT code 99183 services

to be billed to Medicare.

19. On or about August 2008, Michael

concealing from Medicare and other health

care benefit programs, as defined in 18 U.S.C.

§ 24(b), the nature and existence of the

conspiracy.

15. From on or about January 2008, to June

2011, Stanley Thaw and his co-conspirator

engaged in a scheme to defraud Medicare and

other health care benefit programs, as defined

in 18 U.S.C. § 24(b), by causing the

submission of claims for reimbursement for

physician supervision and attendance under

CPT code 99183 that falsely represented to


programs, as defined in 18 U.S.C. § 24(b), that

the physician supervised and attended multiple

HBOT sessions/dives for patients each day,

when that physician in fact had not, and only

supervised and attended a patient's single

HBOT session/dive each day.

17. On or about January 2008, Stanley Thaw

and his co-conspirator retained a Dallas-area

health care consultant to perform an audit of

their company's billing and collections agent.

On or about January 24, 2008, the consultant

met with and provided Stanley Thaw and his

co-conspirator with a written report clearly

stating CPT code 99183 was not time-based,

and could only be submitted to Medicare once

per each HBOT session/dive. The written

report given to Stanley Thaw and his co-

conspirator also informed them that due to the

sheer number of improper CPT code 99183

services billed to Medicare, their company had

been significantly overpaid, and it needed to

refund those payments.

18. Stanley Thaw and his co-conspirator did

not repay Medicare and continued to cause

claims with multiple numbers of CPT code

99183 services to be billed to Medicare.

19. On or about August 2008, Stanley Thaw


9


App. 070-74


App. 051-55

Kincaid directed staff and physicians employed

by the various HBO2Works companies to

submit claims with at least two CPT codes

99183 for each HBOT session.

20. A physician6 employed by one of the

HBO2Works companies, after confirming with

a HBOT industry association, notified Michael

Kincaid, his co-conspirator, and others, in

writing, on or about December 1, 2008, that it

was improper to bill Medicare for two sessions

of physician supervision and attendance under

CPT code 99183 when the patient had only one

HBOT session/dive.

21. On or about December 16, 2008,

Michael Kincaid asked the HBO2 Works

companies’ billing agent to research whether

multiple sessions under CPT code 99183 could

be billed to Medicare. On or about December l6,

2008, the billing company e-mailed Michael

Kincaid informing him all articles stated that

Medicare only paid for physician supervision

and attendance under CPT code 99183 once per

each patient's HBOT session. The email to

Michael Kincaid also recommended that he and

his associates stop submitting claims to

Medicare with multiple CPT codes 99183 and

simply bill for one session at double the charge.

22. On or about September 24, 2009,

Michael Kincaid and his co-conspirator caused

to be submitted to Medicare, by and through

Trailblazer Health Enterprises, LLC, claim

number 452209271496400 requesting $1250.00

in reimbursement from Medicare for two

sessions/dives of physician supervision and

attendance of HBOT under CPT code 99183

even though the physician only supervised and

attended one session/dive that day.

directed staff and physicians employed by the

various HBO2Works companies to submit

claims with at least two CPT codes 99183 for

each HBOT session.

20. A physician employed by one of the

HBO2Works companies, after confirming with

a HBOT industry association, notified Stanley

Thaw, his co-conspirator, and others, in

writing, on or about December 1, 2008, that it

was improper to bill Medicare for two sessions

of physician supervision and attendance under

CPT code 99183 when the patient had only one

HBOT session/dive.

21. On or about December 16, 2008, Stanley

Thaw’s co-conspirator asked the HBO2 Works

companies’ billing agent to research whether

multiple sessions under CPT code 99183 could

be billed to Medicare. On or about December

16, 2008, the billing company e-mailed

Stanley Thaw’s co-conspirator informing him

all articles stated that Medicare only paid for

physician supervision and attendance under

CPT code 99183 once per each patient's HBOT

session. The email to Stanley Thaw’s co-

conspirator also recommended that they stop

submitting claims to Medicare with multiple

CPT codes 99183 and simply bill for one

session at double the charge.

22. On or about May 5, 2009, Stanley Thaw

and his co-conspirator caused to be submitted

to Medicare, by and through Trailblazer Health

Enterprises, LLC, claim number

451509141015830 requesting $1250.00 in

reimbursement from Medicare for six

sessions/dives of physician supervision and

attendance of HBOT under CPT code 99183

even though the physician only supervised and

attended one session/dive that day.

6 The referenced physician is Dr. Le.


10


App. 070-74


App. 051-55

23. Michael Kincaid and his co-conspirator

continued to direct claims be submitted to

Medicare and other health care benefit programs

containing multiple CPT codes 99183 through

at least June 2011.

23. On or about September 24, 2009,

Stanley Thaw and his co-conspirator caused to

be submitted to Medicare, by and through

Trailblazer Health Enterprises, LLC, claim

number 452209271496400 requesting

$1250.00 in reimbursement from Medicare for

two sessions/dives of physician supervision

and attendance of HBOT under CPT code

99183 even though the physician only

supervised and attended one Session/dive that

day. Stanley Thaw and his co-conspirator

continued to direct claims be submitted to


programs containing multiple CPT codes

99183 through at least June 2011.

Each defendant entered into a Plea Agreement and pled guilty to Count One of the

superseding information, conspiracy to commit health care fraud (18 U.S.C. § 1347), agreeing to

permit the Court to impose sentencing. Kincaid Plea Agreement, App. 056-62; Thaw Amended

Plea Agreement, App. 075-82). The defendants’ nearly-identical plea agreements said, in pertinent

part:

Kincaid Plea Agreement

App. 056

Thaw Amended Plea Agreement

App. 075

Kincaid . . . pleads guilty to the offense alleged

in Count One of the superseding information

charging a violation of 18 U.S.C. § 371, that is,

Conspiracy to Commit Healthcare Fraud, (18

U.S.C. § 1347). Kincaid understands the nature

and elements of the crime to which he is

pleading guilty, and agrees that the factual

resume he has signed is true and will be

submitted as evidence.

Thaw . . . pleads guilty to the offense alleged in

Count One of the superseding information

charging a violation of 18 U.S.C. § 371, that is,

Conspiracy to Commit Healthcare Fraud, (18

U.S.C. § 1347). Thaw understands the nature

and elements of the crime to which he is

pleading guilty, and agrees that the factual

resume he has signed is true and will be

submitted as evidence.

On the basis of these documents and after a day-long hearing, Judge Solis imposed judgment

against defendants Thaw and Kincaid on June 5, 2014. Thaw Judgment, App. 083-88; Kincaid

Judgment, App. 089-94. Both were sentenced to 5 years in prison and ordered to pay, jointly and


11

severally, $1,503,442.45 in restitution7 in connection with their guilty pleas on Count I of their

Superseding Informations. Id.

LEGAL STANDARD

The Court shall grant summary judgment if the movant shows that there is no genuine issue

as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P.

56(a). The Court must consider all evidence in the light most favorable to the party resisting the

motion. Trevino v. Celanese Corp., 701 F.2d 397, 407 (5th Cir. 1983). An issue as to a material

fact is genuine if there is “sufficient evidence favoring the non-moving party for a jury to return a

verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91

L.Ed.2d 202 (1986). The substantive law identifies which facts are material. Only disputes over

facts that might affect the outcome of the suit will properly preclude the entry of summary

judgment. Id.

ANALYSIS

Because there is no genuine issue as to any material fact and the defendants’ criminal

convictions legally preclude them from challenging their civil liability under the False Claims Act,

Dr. Le is entitled to summary judgment as a matter of law. The False Claims Act provides:

Notwithstanding any other provision of law, the Federal Rules of Criminal

Procedure, or the Federal Rules of Evidence, a final judgment rendered in favor of

the United States in any criminal proceeding charging fraud or false statements,

whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall

estop the defendant from denying the essential elements of the offense in any action

which involves the same transaction as in the criminal proceeding and which is

brought under subsection (a) or (b) of section 3730.

7 Of that amount, $702,279.64 is to be paid to the United States ($599,095.28 to the Centers

for Medicare and Medicaid Services and $103,184.36 to the Office of Personnel Management,

which over sees the Federal Employees Health Benefit Program) and the remainder to private

insurers. Thaw Judgment, App. 087; Kincaid Judgment, App. 093.


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31 U.S.C. § 3731(e). It is well established that “a prior criminal conviction may work an estoppel

in favor of the Government in a subsequent civil proceeding ... [provided the questions were]

‘distinctly put in issue and directly determined’ in the criminal prosecution.” Emich Motors Corp.

v. General Motors Corp., 340 U.S. 558, 568–69, 71 S.Ct. 408, 413–14, 95 L.Ed. 534 (1951);

Thomas v. Can-Do, Inc., 74 F.3d 1236 (5th Cir. 1995) (collateral estoppel applies in criminal and

civil cases to bar “relitigation of an issue actually and necessarily decided in a prior action”)

(citations omitted); S.E.C. v. Gruenberg, 989 F.2d 977, 978 (8th Cir. 1993). The essential elements

of Thaw’s and Kincaid’s criminal pleas are the same as those that are relevant to their FCA

violations. The criminal proceeding determined as a matter of law the predicate facts necessary to

find violations of the False Claims Act. As a result, defendants are prevented from denying the

allegations of health care fraud detailed in Dr. Le’s qui tam complaint.

The elements essential to a conviction for the commission of health care fraud are (1) a

person “knowingly and willfully executes, or attempts to execute, a scheme or artifice” (2) “to

defraud any health care benefit program” or (3) “to obtain, by means of false or fraudulent

pretenses, representations, or promises, any of the money or property owned by, or under the

custody or control of, any health care benefit program.” 18 U.S.C. § 1347. To establish a criminal

conspiracy under 18 U.S.C. § 371, “the government must prove: ‘(1) an agreement between two

or more persons to pursue an unlawful objective; (2) the defendant's knowledge of the unlawful

objective and voluntary agreement to join the conspiracy; and (3) an overt act by one or more of

the members of the conspiracy in furtherance of the objective of the conspiracy.’” United States v.

Hilliard, 578 F. App'x 439, 441 (5th Cir. 2014), citing United States v. Freeman, 434 F.3d 369,

376 (5th Cir. 2005) (citing United States v. Peterson, 244 F.3d 385, 389 (5th Cir. 2001); United

States v. Hayes, 574 F.3d 460, 472 (8th Cir. 2009) (“The essential elements of a section 371

conspiracy crime are that: (1) the defendants agreed with another, (2) to commit crimes against the


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United States or violate the laws of the United States, and (3) at least one overt act was committed

in furtherance of the agreement.”)

Thaw and Kincaid voluntary pled guilty to agreeing to commit crimes against the United

States by knowingly and willfully executing a scheme to defraud health care benefit programs and

obtain by false pretenses money under the control of the health care benefit program. Specifically,

they admitted to knowingly submitting false claims (1) which falsely identified the treating

physician, and (2) resulted in double billing for two HBOT sessions per day when only one session

was provided. These elements are detailed in the charge of Conspiracy to Commit Healthcare

Fraud in the defendants’ Superseding Information. Thaw Superseding Information, App. 048-55;

Kincaid Superseding Information, App. 067-74. In an Amended Plea Agreement Thaw admitted

to guilt alleged in Count One of the Superseding Information, Conspiracy to Commit Healthcare

Fraud, 18 U.S.C. § 1347, on July 30, 2014. App. 075. Similarly, Kincaid, in his Plea Agreement,

admitted his guilt in connection with the allegations in Count One of the Superseding Information,

Conspiracy to Commit Healthcare Fraud, 18 U.S.C. § 1347, on July 26, 2014. App. 056.

Defendants’ inability to challenge the essential elements of their convictions, prevents

them from denying civil liability under the False Claims Act. Under the FCA, the Fifth Circuit

has adopted four elements

that a relator must satisfy in order to state a cause of action under the FCA generally:

(1) a false statement or fraudulent course of conduct; (2) that was made or carried

out with the requisite scienter; (3) that was material; and (4) that caused the

government to pay out money (i.e., that involved a claim).

United States ex rel. Spicer v. Westbrook, 751 F.3d 354, 365 (5th Cir. 2014), citing United States

ex rel. Longhi v. United States, 575 F.3d 458, 467 (5th Cir. 2009) (internal quotation marks

omitted). Dr. Le’s claim under 31 U.S.C. § 3730(a)(1)(A) also carries an “express presentment

requirement,” meaning that defendants must have actually submitted or presented a false claim to


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the government. U.S. ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 188 (5th Cir. 2009).8 To prove

a False Claims Act conspiracy, “a relator must show ‘(1) the existence of an unlawful agreement

between defendants to get a false or fraudulent claim allowed or paid by [the Government] and (2)

at least one act performed in furtherance of that agreement.’” Id. at 193, quoting United States ex

rel. Farmer v. City of Houston, 523 F.3d 333, 343 (5th Cir. 2008). Presentment of a claim for

payment “need not be proven nor pled to prevail on a False Claims Act conspiracy charge.” Id.

Under the FCA, defendants’ wrongdoing must have been done “knowingly.” 31 U.S.C. § 3729(a),

(b).

The elements of the False Claims Act violations asserted in Counts I and III of Dr. Le’s

Complaint are consistent with the essential elements of defendants’ criminal convictions for

conspiracy to commit health care fraud.

Defendants’ are Precluded from Challenging the Essential Elements

of their Convictions, which factually Track Dr. Le’s Allegations

Factually, Dr. Le’s complaint documents the same facts upon which defendants’

convictions are based. She alleged that her employment by Thaw and Kincaid began in 2008 and

the defendants directly supervised the Houston and Hurst centers and later the San Antonio center.

Thaw admitted that from June 2004 through 2013 he was at various times the president, CEO,

member, registered agent and co-owner of HBO2Works, LLC, HBO2Works Houston, LLC,

HBO2Works San Antonio, LLC, Cross Hyperbaric of Texas, P.L.L.C. App. 037-38, 063-64; see

Complaint at ¶¶ 6-7. Kincaid admitted from on or about 2005 through 2013 he was at various times

a manager, member, CEO and co-owner of HBO2Works, LLC, HBO2Works Houston, LLC,

8 The False Claims Act was amended in 2009. As a result, Dr. Le’s Complaint cites statutory

provisions applicable to defendants’ wrongdoing that occurred before and after the statutory

amendment. As a substantive matter, however, changes to the statutory language have no material

impact on the analysis here.


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HBO2Works San Antonio, LLC, Cross Hyperbaric of Texas, P.L.L.C. Id. The defendants also

admitted as co-conspirators to instructing each billing agent as to CPT and diagnosis codes to

submit to Medicare and other federal health care benefit programs for reimbursement. E.g., App.

039, 065; Complaint at ¶¶ 35-36, 56-57.

Defendants Pled Guilty to Billing for Treatment Using the Provider

Number of a Physician Who Did Not Provide the Treatment

Dr. Le stated in her complaint that she was the only physician providing hyperbaric therapy

to patients at HBO2Works Houston, LLC. Without her knowledge, claims for all Houston patients

were submitted falsely to Medicare using the National Provider Identifier (“NPI”) number of Dr.

John Paul Thompson, the medical director of the Hurst facility, HBO2Works, LLC, despite the

fact that he had never seen the patients. Complaint at ¶¶ 56-57. Thaw and Kincaid, as co-

conspirators, admitted in their Superseding Informations that a “Person A did not treat any patient”

but “Person A allowed” Thaw and Kincaid to use his Medicare provider number to seek

reimbursement from Medicare. App. 051, 070. The exact elements of the defendants’ fraudulent

scheme, the defendants submission of claims to Medicare using the provider number of a physician

who did not treat the patient in the claim, was detailed in Dr. Le’s complaint and admitted to by

the defendants as part of their criminal plea.

Defendants Pled Guilty to Fraudulent Double

Billing for HBOT Sessions Using CPT Code 99183

Dr. Le also described the defendants’ scheme of submitting fraudulent claims for physician

services for two HBOT sessions per day when only one session was provided. A session includes

the physician work involved in readying, supervising and attending to the patient during a single

HBOT session, regardless of its duration. Thaw and Kincaid admitted that from on or about

January 2008 to June 2011 they falsely represented to Medicare that the physician supervised and

attended multiple HBOT sessions/dives for patients each day, when in fact, the physician had only


16

supervised and attended a single HBOT dive/session per patient per day. Complaint at ¶¶ 29-38;

App. 052-55, 071-74. Again, the essential elements of the fraud to which the defendants

subsequently pled guilty preclude them from denying liability under the False Claims Act.

CPT code 99183 provides for physician attendance and supervision of HBOT on a per

session basis. See Medicare Claims Processing Manual, Publication #100-04 Chapter 32, 30.1;

Complaint at ¶ 31. Dr. Le understood that CPT code 99183 was to be submitted once per session

regardless of the session’s length because it is not a time-based code. Complaint at ¶ 33. In her

complaint Dr. Le described two meetings with Kincaid in November 2008 in which he instructed

Dr. Le to use CPT code 99183 twice per session. Complaint at ¶ 35; see App. 054, 073. Thaw and

Kincaid admitted that they had hired a consultant to audit their company’s billing in January 2008.

App. 053, 073. The consultant informed the defendants that CPT code 99183 was not time-based

and could only be submitted once per HBOT session/dive. App. 053, 072. Due to fraudulent

submissions of this code, the consultant informed the defendants in January 2008 that their

company had been significantly overpaid by Medicare and a refund to Medicare should be made.

Id. Thaw and Kincaid did not refund Medicare and, as Dr. Le stated in her complaint, the

defendants continued the fraud, instructing her and other employees to fraudulently submit CPT

code 99183 twice for each HBOT session. App. 055, 073-74; Complaint at ¶¶ 25, 35-36. The

defendants have pled guilty to conspiring to double billing for therapy sessions and so are estopped

from denying the essential elements of the offense which are the exact elements relevant to the

FCA violations detailed in Dr. Le’s complaint.

Dr. Le is Entitled to Summary Judgment as a Matter of Law

Based on defendants’ criminal convictions, the impact of the FCA’s statutory estoppel

provision (31 U.S.C. § 3731(e)), and common law principles of estoppel, defendants are precluded

from challenging their civil liability under the FCA (31 U.S.C. § 3730(a)(1)(A)) for submitting


17

false claims to Medicare under a false provider number and for submitting false claims that double-

billed Medicare for CPT code 99183.

The facts in this case mirror United States v. Boutte. In Boutte, the United States contended

that a guilty verdict in a criminal trial determined as a matter of law the predicate facts necessary

to find the defendant, Boutte, liable for committing twenty-three violations of the False Claims

Act. United States v. Boutte, 907 F. Supp. 239, 241 (E.D. Tex. 1995), aff'd, 108 F.3d 332 (5th Cir.

1997). The district court noted that “[c]ollateral estoppel is particularly appropriate when the prior

proceeding was a criminal action.” Id. at 241, citing United States v. Thomas, 709 F.2d 968, 972

(5th Cir. 1983), cert. denied, 475 U.S. 1014 (1986) and United States v. Killough, 848 F.2d 1523,

1528 (11th Cir. 1988).

Because of the existence of a higher standard of proof and greater procedural protection in

a criminal prosecution, “a conviction is conclusive as to an issue arising against the criminal

defendant in a subsequent civil action.” Boutte, 907 F. Supp. at 241, quoting Thomas, 709 F.2d at

972. The court ruled that the plaintiff had shown as a matter of law why it should prevail against

the defendant, granted summary judgment under the False Claims Act and awarded treble the

amount of the government's loss. Boutte, 907 F. Supp. at 242.

On appeal, the Fifth Circuit affirmed, noting:

The Government correctly asserts, and the court below agreed, that Boutte is

collaterally estopped from challenging the facts underlying the 23 counts for which

he has already been convicted. The Government is not required to reprove the same

facts especially when, as here, a lower standard of proof applies to the civil

violations under the False Claims Act. 31 U.S.C. § 3731(d).

United States v. Boutte, 108 F.3d 332 (5th Cir. 1997). The Circuit Court explained why

summary judgment was appropriate:

While a prior criminal conviction . . . might not, without more, collaterally estop a

defendant in a subsequent civil suit under the False Claims Act, in the instant case

the court correctly held on summary judgment that the False Claims Act applied to


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all counts. The criminal indictment alleged that the false statements were part of a

scheme to defraud the government, and were submitted in order to ensure continued

federal funding, and there was uncontradicted testimony that the false statements

were relied on by the Government in deciding whether to fund defendant's program.

In addition to the facts underlying the convictions, the evidence of payment to

Boutte based on his false statements support the summary judgement [sic].

Id. As was the case in Boutte, the stipulated facts from defendants’ criminal convictions here

confirm that defendants fraudulently obtained payments from government-funded health insurance

programs by submitting false claims through a scheme to defraud the United States that resulted

in violations of the False Claims Act.

Dr. Le’s civil action and the defendants’ criminal judgment plainly stem from the same

conduct. Thaw and Kincaid admitted to knowingly, intentionally and willfully conspiring and

agreeing to defraud Medicare for HBOT-related services. There is no dispute as to the facts

establishing the conspiracy to which the Thaw and Kincaid entered pleas of guilty, which are based

on the same facts as this civil FCA proceeding. When there are no genuine issues as to any material

fact, summary judgment should be awarded to the plaintiff.

FALSE CLAIMS ACT DAMAGES

The False Claims Act provides that persons violating the Act are liable “for a civil penalty

of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties

Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104-410), plus 3 times the

amount of damages which the Government sustains because of the act of that person.”9 31 U.S.C.

§ 3729(a)(1). The Act also requires defendants to pay the attorneys’ fees, expenses and costs

incurred on behalf of the relator. Id. at 3730(d)(2).

9 Pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990, civil penalties

under the False Claims Act now range from $5,500 to $11,000 per false claim. 28 C.F.R. § 85.3(9).


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Thaw and Kincaid pled guilty to Conspiracy to Commit Healthcare Fraud. The Court in

the Criminal Case was required to determine the total amount of the victim's loss when ordering

restitution. 18 U.S.C. § 3664; Boutte, 907 F. Supp. at 242 (assessing treble FCA damages based

on restitution order in related criminal case); United States v. Szilvagyi, 398 F. Supp. 2d 842, 849-

50 (E.D. Mich. 2005) (same). Judge Solis determined that the loss suffered by United States is

$702,279.64 and ordered Thaw and Kincaid, jointly and severally, to pay that amount as

restitution. App. 087, 093. Under the FCA, Dr. Le is entitled to recover on behalf of the United

States treble damages of $2,106,838.92, plus attorneys’ fees, expenses and costs incurred on her

behalf. Dr. Le leaves the imposition of civil penalties to the discretion of the Court.10

CONCLUSION

Dr. Le’s qui tam complaint detailed the fraud perpetrated by the defendants Thaw and

Kincaid. The fraudulent schemes detailed by Dr. Le are the same transactions for which criminal

proceedings resulted in admissions of guilt by the defendants. Final criminal judgments have been

rendered, and prison sentences and restitution ordered. The essential elements of defendants’

criminal offenses form the basis for civil liability under the False Claims Act. The defendants are

estopped from denying liability. Therefore, Dr. Le is entitled to summary judgment under the False

Claims Act on Count I (submission of false claims, 31 U.S.C. §§ 3729(a)(1) (1986) and

3729(a)(1)(A) (2009)) and Count III (conspiracy to defraud the United States, 31 U.S.C.

§§ 3729(a)(3) (1986) and 3729(a)(1)(C) (2009)) of her qui tam Complaint in the amount of

$2,106,838.92, plus reasonable attorneys’ fees, expenses and costs.

10 With respect to attorneys’ fees, expenses and costs, Dr. Le asks the Court to enter judgment

as to liability, permitting the parties 30 days to negotiate a resolution of the applicable amounts.


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Respectfully submitted,

______________________________

Mitchell R. Kreindler

Texas Bar No. 24033518

Melissa Neiman


KREINDLER & ASSOCIATES

9219 Katy Freeway, Suite 206

Houston, Texas 77024-1415

T 713.647.8888

F 713.647.8889

[email protected]

[email protected]

Bill E. Davidoff


FIGARI & DAVENPORT

3400 Bank of America Plaza

901 Main Street

Dallas, Texas 75202

T 214.939.2072

F 214.939.2090

[email protected]

ATTORNEYS IN CHARGE FOR

QUI TAM RELATOR PHI-NGA JEANNIE LE


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CERTIFICATE OF SERVICE

I certify that on January 22, 2015, Relator’s Motion for Partial Summary Judgment was

filed electronically and service accomplished automatically through the Notice of Electronic Filing

issued by the Court’s Electronic Case Filing (ECF) System on all counsel of record. Defendant

Kincaid was also served via first-class mail as follows:

Michael Kincaid 45049-177

FCI El Reno

Federal Correctional Institution

P.O. Box 1500

El Reno, OK 73036

________________________

Mitchell R. Kreindler


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