Express FCA Falsehoods Need No Knowledge-of-Materiality; Premature Global Billing Is Factually False; CPT Ambiguity Bars Summary Judgment

Introduction

In Montcrief v. Peripheral Vascular Associates, P.A., No. 24-50176 (5th Cir. Mar. 28, 2025), the Fifth Circuit addressed a high-stakes False Claims Act (FCA) suit over Medicare billing for vascular ultrasounds. The relators alleged that Peripheral Vascular Associates (PVA) billed “globally” (both the technical and professional components) before physicians completed their interpretive work and, in some instances, billed for both evaluation-and-management (E/M) services and ultrasounds without preparing a separate standalone ultrasound report before billing. The district court had granted the relators partial summary judgment on falsity and scienter and later adopted an interest-based model of damages based on a post-trial expert declaration, culminating in a roughly $28.7 million judgment.

The Fifth Circuit affirmed in part, reversed in part, and remanded for a new trial. The panel:

• Affirmed summary judgment for relators on falsity and scienter for “Testing Only” claims (global ultrasound claims where no E/M visit occurred and no interpretive note existed in the Allscripts medical record before billing).
• Reversed summary judgment on “Double Billing” claims (claims with an E/M encounter and an Allscripts interpretive note, but no finalized standalone MedStreaming report before billing), holding the CPT Manual’s documentation requirements are ambiguous and must go to a jury.
• Held that, in cases alleging express false statements, the FCA’s scienter requirement does not extend to materiality; a jury instruction on the defendant’s “knowledge of materiality” was not required.
• Vacated the damages award and ordered a new trial on damages, rejecting the district court’s reliance on a post-trial expert declaration under the Fifth Circuit’s maximum recovery rule.

Judge Duncan concurred, questioning the Article II constitutionality of qui tam suits (consistent with his prior views and Justice Thomas’s and Justice Kavanaugh’s comments), but those concerns remain nonbinding in light of the Fifth Circuit’s en banc decision in Riley v. St. Luke’s Episcopal Hospital.

Summary of the Opinion

• Testing Only claims: Global billing before the physician’s interpretive work was completed and documented was a “paradigmatic” factual falsity—billing for services not yet furnished. Summary judgment for relators on falsity and scienter affirmed.
• Double Billing claims: The CPT-4 Manual’s cross-referenced guidance (Medicine/Radiology/E/M) is ambiguous on whether a separate, standalone ultrasound report (e.g., MedStreaming) is required in addition to an E/M note in the Allscripts record. Summary judgment for relators on falsity and scienter reversed; issue goes to a jury.
• Materiality: The jury’s materiality finding was supported by expert evidence that Medicare would not pay for incomplete procedures.
• Knowledge of materiality: No such showing or jury instruction is required for express falsehoods; scienter “is plainly directed to the falsity of the claims submitted” (relying on United States ex rel. Schutte v. SuperValu Inc.).
• Damages: The district court abused its discretion by using a post-trial expert declaration to impose an interest-based damages remittitur; under the maximum recovery rule, new trial on damages (at minimum for Testing Only claims) is required. Potential retrial on the number of actionable claims is left to the district court’s discretion if the issues are inextricably intertwined.

Analysis

Precedents Cited and Their Role

• United States ex rel. Schutte v. SuperValu Inc., 598 U.S. 739 (2023): Central to scienter. The Court held defendants cannot escape FCA liability by positing a hypothetical reasonable interpretation when they actually believed their claims were false. The Fifth Circuit uses Schutte twice: to sustain scienter on Testing Only claims (reckless disregard of obvious risk) and to clarify that, for express false claims, the FCA’s scienter focuses on falsity, not materiality.
• Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016): Materiality framework. The Fifth Circuit affirms the jury’s materiality finding by crediting proof that Medicare would not pay for incomplete procedures. The court distinguishes Escobar’s implied false certification context from the express falsehoods at issue here for the scienter analysis.
• United States ex rel. Polansky v. Executive Health Resources, Inc., 599 U.S. 419 (2023): Cited for qui tam posture and the Government’s role. The concurrence relies on Polansky’s separate opinions to question FCA’s constitutionality, but the panel is bound by Riley.
• United States ex rel. Ruscher v. Omnicare, Inc., 663 F. App’x 368 (5th Cir. 2016): Provides the factually vs. legally false distinction; Testing Only claims are “factually false.”
• United States v. Science Applications Int’l Corp., 626 F.3d 1257 (D.C. Cir. 2010): Describes billing for services not yet furnished as a “paradigmatic case” of factual falsity, used to characterize Testing Only claims.
• Ohio Hospital Association v. Shalala, 201 F.3d 418 (6th Cir. 1999): The CPT-4 Manual as the “Rosetta Stone” for coding; underscores the Manual’s centrality to Medicare billing norms.
• Standards of review and procedural guardrails: Guzman v. Allstate Assurance Co., 18 F.4th 157 (5th Cir. 2021) (summary judgment; “beyond peradventure” where movant bears trial burden); Kirchner v. Deutsche Bank Nat’l Tr. Co., 896 F.3d 337 (5th Cir. 2018) (reasonable inferences in non-movant’s favor); Granberry v. O’Barr, 866 F.2d 112 (5th Cir. 1988) (sufficiency of evidence); Caldarera v. Eastern Airlines, Inc., 705 F.2d 778 (5th Cir. 1983) (maximum recovery rule for remittitur); Longoria v. Hunter Express, Ltd., 932 F.3d 360 (5th Cir. 2019) (remittitur review); Smith v. Transworld Drilling Co., 773 F.2d 610 (5th Cir. 1985) (duty to grant new trial if verdict unsatisfactory); Worsham v. City of Pasadena, 881 F.2d 1336 (5th Cir. 1989) (damages intertwined with liability).
• United States v. Sineneng-Smith, 590 U.S. 371 (2020): Cited to respect party presentation in framing the “meaning of guidance” as an issue of fact to be tried.

Legal Reasoning

1) Falsity: Testing Only claims (affirmed as factually false)

A vascular ultrasound has a technical component (performed by a technician) and a professional component (interpretation by a physician). PVA routinely billed “globally,” meaning it represented both components were complete at the time of claim submission. For Testing Only claims, patients had no E/M visit, no interpretive note in Allscripts, and PVA conceded physicians often finalized the only interpretive documentation—the MedStreaming report—after billing. The Fifth Circuit held that the only reasonable inference is that PVA billed the professional component before it was furnished, rendering the global claims “factually false.” The court emphasized the CPT-4 Medicine section’s vascular studies language: “interpretation of study results with copies for patient records of hard copy output with analysis of all data.” That requires interpretive analysis to be memorialized in the patient record before billing. The CMS-1500 certification (“services … were … personally furnished by me or … under my direct supervision”) was therefore expressly false when submitted before the interpretation was completed and documented.

2) Falsity: Double Billing claims (reversed; ambiguity precludes summary judgment)

For patients who had an E/M encounter and an ultrasound, PVA often documented the interpretation within the Allscripts encounter note and billed globally even when it had not yet finalized a separate MedStreaming report. The district court relied on Radiology section language, including a 2020 statement (“use of ultrasound, without … final, written report, is not separately reportable”), to require a standalone written ultrasound report. The Fifth Circuit rejected that approach for two reasons:

• Vascular ultrasounds are in the Medicine section; cross-references to Radiology evolved around 2016, and relying on later Radiology guidance for earlier claims “mixes and matches” across sections and timeframes.
• The E/M guidance itself (allowing separate reporting of the “professional component … with preparation of a separate distinctly identifiable signed written report” using modifier 26) is ambiguous as to whether an interpretation embedded within an E/M note in Allscripts can be “separate [and] distinctly identifiable,” i.e., whether a standalone MedStreaming document is strictly required pre-billing.

PVA’s expert opined that the CPT-4 guidance did not mandate a stand-alone report in the E/M context so long as the interpretation was documented. Given that ambiguity and versioning issues (2014–2016 vs. post-2016 updates), summary judgment for relators on falsity (and scienter) was improper; a jury must resolve it.

3) Scienter (knowledge) at summary judgment

Testing Only: The record showed, at minimum, reckless disregard. Emails before the 2014 MedStreaming adoption noted studies “cannot be billed until actually interpreted,” and a 2017 policy shift to bill only after interpretation aimed to avoid “audit requests for incomplete medical records.” Despite this awareness, PVA submitted global claims before completing interpretations. Under Schutte’s articulation of recklessness (“conscious of a substantial and unjustifiable risk” and submitting anyway), summary judgment on scienter for Testing Only claims was proper.

Double Billing: The same evidence proved little about whether an Allscripts interpretation counts as a “separate [and] distinctly identifiable” written report under the E/M guidelines. Given the ambiguous guidance, scienter on Double Billing also belongs to the jury.

4) Materiality

The jury found materiality, and the Fifth Circuit affirmed, crediting expert testimony that Medicare would not pay for incomplete procedures. That satisfies Escobar’s “attach importance” standard. The Government’s non-intervention did not undermine materiality; it later filed an amicus emphasizing its interest in Medicare integrity.

5) No “knowledge-of-materiality” requirement for express falsehoods

PVA sought a jury instruction requiring proof that PVA knew the falsity was material to the Government. The Fifth Circuit rejected that, distinguishing Escobar’s implied false-certification context from this case’s express falsehoods, where the CMS-1500 certification stated that services were furnished when they were not. Relying on Schutte, the court held that, in such express-falsity cases, the FCA’s scienter “is plainly directed to the falsity of the claims submitted.” No separate “knowledge-of-materiality” scienter showing is required.

6) Damages, remittitur, and the maximum recovery rule

Recognizing that “payment today is not the same as payment tomorrow,” the district court replaced the jury’s damages award with an interest-based remittitur, but conceded the trial record lacked sufficient evidence to calculate damages and then relied on a post-trial expert declaration to set the figure. That was an abuse of discretion. Under the Fifth Circuit’s maximum recovery rule, remittitur must reduce to the maximum the jury could have awarded on the record made at trial—not on post-trial submissions. Because both sides offered new, contested calculations after the verdict, the proper remedy is a new damages trial (at minimum for the Testing Only claims).

The panel left open whether damages and the precise number of actionable Testing Only claims must be retried together, directing the district court to decide whether those issues are too intertwined to separate.

Impact

• Providers and billing entities:
  • Global billing for diagnostic studies requires completion and documentation of both the technical and professional components before submission. For vascular ultrasounds, the “interpretation … with analysis of all data” must be memorialized in the patient record pre-billing.
  • Where an E/M note includes the physician’s ultrasound interpretation, whether a separate standalone ultrasound report is required remains a fact question—turning on CPT versioning, section-specific guidance, and how “separate [and] distinctly identifiable” is satisfied in context. Expect more jury trials on this issue unless regulators clarify.
  • Policy “experiments” that briefly adopt more conservative billing practices (e.g., delaying billing until a standalone report is signed) can be potent evidence of knowledge of risk; retreating from such safeguards for cash-flow reasons can bolster scienter.
• FCA litigants:
  • In the Fifth Circuit, for express false certifications, plaintiffs need not prove the defendant’s knowledge of materiality; scienter centers on falsity. Expect defendants’ requests for “knowledge-of-materiality” instructions to be rejected outside implied-certification settings.
  • Ambiguity in coding manuals (especially across sections and updates) can defeat summary judgment on falsity and scienter. Claims tied to evolving CPT language may require claim-by-claim, time-sensitive proof.
  • Damages for prematurely billed-but-performed services may be measured by the time value of money, but the methodology and figures must be proved at trial. Post-verdict expert “fixes” will not survive appeal under the maximum recovery rule.
• Government and compliance:
  • Even in declined cases, the Government’s later amicus participation can reinforce materiality and clarify policy interests.
  • Agencies and code-set maintainers should consider clarifying cross-references between Medicine, Radiology, and E/M sections to avoid inconsistent reliance and to reduce litigation over “standalone report” requirements.

Complex Concepts Simplified

• FCA elements:
  • Falsity: The claim was factually false (e.g., billing for services not furnished) or legally false (e.g., violating a relevant condition for payment).
  • Scienter: The claim was made knowingly, meaning actual knowledge, deliberate ignorance, or reckless disregard (Schutte).
  • Materiality: The falsity would have mattered to the Government’s payment decision (Escobar).
  • Causation/claim: The false claim caused the Government to pay or forgo money owed.
• Technical vs. professional component: Diagnostic tests often have two parts—the test itself (technical) and the physician’s interpretation (professional). Billing “globally” represents that both are completed at the time of claim submission.
• CPT-4 codes and modifiers:
  • CPT-4 is the coding system for procedures. “TC” denotes the technical component only; “26” denotes the professional component only; no modifier means global billing.
  • Medicine vs. Radiology vs. E/M sections have distinct guidance; cross-references have changed over time. Version and section matter.
• Allscripts vs. MedStreaming:
  • Allscripts housed the patient’s medical record, including E/M notes and sometimes an embedded ultrasound interpretation.
  • MedStreaming generated standalone diagnostic reports for ultrasound studies. In this case, many were signed after claims were submitted.
• Express vs. implied falsehoods:
  • Express falsehoods involve an explicit misrepresentation (e.g., the CMS-1500 certification that services were furnished when they were not).
  • Implied false certification arises when the provider’s claim implicitly—but not explicitly—represents compliance with a material requirement.
  • Here, express falsehoods control; scienter is directed at falsity, not at materiality.
• Remittitur and maximum recovery rule:
  • Remittitur lets a court reduce an excessive jury award, but only to the maximum amount supported by the evidence presented at trial.
  • Courts cannot base remittitur on new, post-trial evidence; if the trial record is insufficient to calculate damages, a new trial is required.
• Time-value (interest-based) damages:
  • When services were eventually performed but billed too early, damages may reflect the value of the Government’s money during the period of premature payment.
  • The start and end points for interest accrual remain open questions the district court may address on remand.

Conclusion

Montcrief establishes several important rules in FCA jurisprudence. First, in the Fifth Circuit, express false claims do not require proof that the defendant knew the falsity was material to the Government; scienter focuses on falsity itself under Schutte. Second, global billing for diagnostic procedures before completing and documenting the physician’s interpretation is a textbook factual falsity. Third, when the CPT-4 Manual’s cross-referenced guidance is ambiguous—particularly across Medicine, Radiology, and E/M sections and across time—summary judgment on falsity and scienter is inappropriate; juries must resolve whether embedded E/M interpretations suffice as “separate [and] distinctly identifiable” written reports. Fourth, damages for prematurely billed services can reflect the time value of money, but they must be proven at trial; courts cannot cure evidentiary gaps with post-verdict expert submissions.

The practical message to providers is clear: align billing practices—especially global claims—with completed and documented professional interpretations contemporaneous with billing, and ensure documentation complies with the applicable CPT section and version in effect on the date of service. For FCA litigants, Montcrief sharpens the scienter inquiry in express-falsity cases and underscores the importance of trial-ready damages proofs. While the concurrence highlights renewed constitutional skepticism of qui tam, Riley remains binding in the Fifth Circuit. On remand, this litigation will test fact-finders’ application of the CPT Manual’s ambiguities and the proper measure of time-based damages, likely influencing compliance protocols and trial strategies across the healthcare industry.