Fox nuts and the False Claims Act

As you begin reading this article this question may enter your mind – what does a fox’s gonads have to do with the False Claims Act, 31 U.S.C. §§1331-1333 (FCA)? Nothing actually but the word is comical and it does lead to FCA cases involving reproductive health.

First, I’ll lay the foundation for the fox nut. I first encountered it at a restaurant in Houston, as a group of us perused the dessert menu and we all started laughing. Our minds immediately going to a fox’s gonads and how this “delicacy” would be incorporated into any dish, let alone a dessert. For those unfamiliar with the term “gonads”, they are the primary reproductive organs in humans and animals (i.e., men – testes and women – ovaries).

Well, it turns out a fox nut is also the edible seed from a particular species of water lily found in certain regions in Asia, which once roasted or fried, has a similarity to popcorn. The anatomic meaning is likely most people’s reaction, yet as just illustrated, there is more than one meaning.

It is the quite distinct meanings of the “fox nut” that prompted me to think about what result could ensue if the meaning of an item is simply presumed with no clarification.

The term “false claim” also has more than one meaning under the FCA, as it can be a factually false claim, a legally false claim (express or implied) or a reverse false claim. Failure to understand the potential liability from a compliance perspective can be significant. For example, if one reads the CMS Form 855, CMS Form 1500 or CMS Form UB-04 (or the electronic equivalent) it is presumed that the individual rendering the care is the individual named on the claim that is being submitted for payment. If the individual is not rendering the care, let alone not licensed at the same level and the claim is submitted with the physician’s name on it, a FCA case predicated on an implied false claim theory may be brought.

A settlement involving reproductive health care is illustrative and serves to highlight not only financial harm to the Federal and NY Governments, but also physical harm to patients. On July 24, 2015, the U.S. Department of Justice (DOJ) and the State of New York announced a settlement involving both a civil settlement of $8,047,291.06 and a criminal charge against Dr. Margossian, “an OB/GYN subspecialty in urogynecology and … sole practitioner at NY Urogynecology & Reconstructive Pelvic Surgery, P.C.” Dr. Margossian eventually entered into a deferred prosecution agreement on the criminal charge.

The DOJ and State of NY initially thought that the physician was rendering the care and it was a while before it asked for clarification because most providers submitting claims are actually rendering the care. As it turns out, Dr. Margossian utilized an unlicensed and often unsupervised staff to treat women suffering from urinary incontinence, in contravention of Medicare and Medicaid regulations. Specifically,

The government’s investigation revealed that between approximately January 1, 2007 and December 31, 2013, the primary focus of Margossian’s practice was the treatment of woman suffering from incontinence.  Patients received urodynamics testing and underwent pelvic floor rehabilitation by an unlicensed staff without proper physician supervision.  Margossian was often absent from the office while conducting surgery at area hospitals and, at times, on vacation out of the country.  Medicare and Medicaid rules required that these procedures be performed by a licensed physician or licensed physical therapist, or a properly trained medical provider under the physician’s direct supervision.  Furthermore, Margossian used improper billing codes to bill Medicare for the pelvic floor rehabilitation, which substantially increased Margossian’s Medicare reimbursement.

Similarly, an April 2, 2026 FCA case involving Jitesh Patel, M.D., Advanced Urology, Inc., and affiliated companies (collectively “Advanced Urology”) settled for $14 million for defrauding the Government by providing “a series of urological and diagnostic procedures that were not performed or were medically unnecessary.” Patient harm was still central because the procedures were not medically necessary.

From a compliance standpoint, these cases underscore the importance of the biller/coder double checking who is rendering care and confirming that the care was actually rendered and not assuming, as in the case of the “fox nut” that there is only one answer. These two examples are not just about money – it’s about human beings who trust they are being treated by a qualified professional which damages trust in the health care system.

Rachel V. Rose, J.D., MBA, advises clients on compliance, transactions, government administrative actions and litigation involving health care, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rose can be reached through her website, www.rvrose.com.