Court: A nurse doing code comparisons in a billing fraud case passes Daubert

By Rose Clifford, editor

© 2009 The Medical-Legal News

• The Gist: As coding and billing fraud cases become more common, attorneys and consultants must remember that their methodologies may have to pass Daubert or other state rules about admitting witnesses. Here, the comparison of treatments to codes was not a medical judgment issue between nurses and doctors. And because coding methodology was reliable, it was admissible.
— RC

In a Medicare billing fraud case, the defendant billing company tried to disqualify an experienced nurse and nurse consultant, Edith M. Sposato, who was offered as a coding expert and who would be testifying that the defendants’ codes would not match the medical treatments paid for by the government.
Sposato, who was well qualified and up to the task, handily prevailed.
The case was U.S. v. Diaz, WL 906725 (S.D.Fla., 2008), which was a federal case. Rule of Evidence 702 and Daubert were thus used to vet the witnesses.
Sposato was to be testifying to the following categories of billing to help establish the presence of fraud: “The diagnosis written on the medical order doesn’t support the treatment prescribed; the treatment prescribed on the order is inconsistent with the HCPCS (Healthcare Common Procedure Coding System) codes written; the order prescribes a medically excessive amount of durable medical equipment” and “the order implies a suspiciously extreme injury, either through what is prescribed, or what HCPCS codes are written.”

A nurse is not a doctor
The defendants first argued that, as a nurse, Sposato had no business second-guessing treatments ordered by doctors and whether or not durable medical equipment is “excessive,” “particularly when she is not privy to any medical records and did not examine the patient.”
The court found such an argument baseless in light of Sposato’s experience, which was extensive. She was an RN, had a Bachelor of Science degree from Florida International University and was an advanced nurse practitioner with 35 years of experience. Sposato had a master’s degree in health management from St. Thomas University and was a legal nurse consultant with certification from the Florida School of Risk Management. Sposato had been an ER nurse, had managed a clinic and treated patients at a retirement community, had assessed patients and created medical histories that “incorporated physicians, medications and special needs.”
She had been the director for Humana Seniors Association where she researched and interpreted Medicare billing and assisting in claims filing. She had worked on audits of medical records and billings to ensure compliance with Medicare regulations previously. She also had been a nurse investigator for the U.S. Attorney’s Office since 1996. There, her duties included reviewing medical records and determining coding and medical necessity. She also had a lot of experience with the type of patients (osteoarthritis) for whom the defendants were allegedly ordering excessive equipment.
In short, she blew them away.

Daubert challenge
The defendants next argued that Sposato’s testimony would not be reliable under Daubert because there would be no peer-reviewed studies or rates of error available, and thus her testimony would not be reliable.
The court said that the Daubert elements were flexible, that her methods were not unreliable and were “suited to the task at hand.” The court said: “The Court agrees with the government [plaintiff] that the factors that would normally be used to gauge scientific expert opinion, such as peer review, publication and rates of error, are not appropriate in assessing Ms. Sposato’s testimony under Rule 702. Any of Sposato’s limitations do not suggest that Sposato’s method was unreliable, only that she was not conducting a scientific study.”
The defendants next argued that doctors sometimes prescribe various types of braces to support patients with osteoarthritis, so not all of their billing was bogus. After the Daubert hearing challenging Sposato, Sposato did sample reviews of some of the equipment billed for, and satisfied the court as to her methodology. The court also noted, to support Sposato under Daubert, that “Sposato’s methodology of comparing the HCPCS codes in the packets with the Medicare coding books is easily verifiable and reliable.”

Jury prejudice
Sposato was limited a bit in inferring too much of the extensiveness of the severity of a patient’s condition. That is, the court said Sposato could testify that an order implies an “extreme injury,” either through what is prescribed, or what HCPCS codes are written, but the court would not permit Sposato to testify that the injuries were “suspicious,” which presumably could prejudice a jury.
As a footnote, two statisticians were not allowed to testify as the court felt they would confuse the jury and that statistical inferences should be left to closing arguments by the government lawyers.

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