No. 22-3481 ___________________________ Stephen B. Grant, on behalf of The United States of America and on behalf of the State of Iowa

Plaintiff - Appellee

v.

Steven Zorn; Iowa Sleep Disorders Center, P.C.; Iowa CPAP, L.L.C.

Defendants - Appellants ___________________________

No. 22-3591 ___________________________ Stephen B. Grant, on behalf of The United States of America and on behalf of the State of Iowa

Plaintiff - Appellant

v.

Steven Zorn; Iowa Sleep Disorders Center, P.C.; Iowa CPAP, L.L.C.

Defendants - Appellees ____________

Appeal from United States District Court for the Southern District of Iowa - Central ____________ Submitted: December 13, 2023 Filed: July 5, 2024 ____________ Before SMITH,1 Chief Judge, GRUENDER and GRASZ, Circuit Judges. ____________ GRUENDER, Circuit Judge.

The False Claims Act (“FCA”) and the Iowa False Claims Act (“IFCA”) authorize private citizens, known as qui tam relators, to recover from those who make false or fraudulent claims for payment to the United States and the State of Iowa respectively. Relator, Stephen Grant, a sleep medicine practitioner, brought this qui tam action under the FCA and the IFCA against Steven Zorn, Iowa Sleep Disorders Center (“Iowa Sleep”), and Iowa CPAP. After a bench trial, the district court found that the defendants had submitted 1,050 false claims to the United States and the State of Iowa. The district court subsequently imposed a total award of $7,598,991.50. For the reasons set forth below, we affirm in part, vacate in part, and remand for further proceedings consistent with this opinion.

I.

Zorn operated and held substantial ownership interests in Iowa Sleep, a medical practice specializing in sleep medicine, and Iowa CPAP, a medical equipment company. Due to financial difficulties at Iowa Sleep, Iowa CPAP provided loans to Iowa Sleep. Iowa Sleep referred patients to Iowa CPAP for free consultations.

Iowa Sleep accepted state and federal funds for its services through government reimbursement programs like Medicare, Medicaid, and Tricare. The amount that can be billed for services rendered through government healthcare

1 Judge Smith completed his term as chief judge of the circuit on March 10, 2024. See 28 U.S.C. § 45(a)(3)(A).

-2- programs depends on a variety of factors, including the time spent with the patient and the complexity of the visit. The government determines the appropriate amount to be reimbursed based on the “code” billed by the provider. In sleep medicine, claims for initial patient visits are coded from 99201 to 99205, and claims for established patient visits are coded from 99211 to 99215. The last number of a code represents the complexity of the visit. Codes ending in the number “5” (e.g., “99205”) are considered the most complex and are reimbursed by the government at a higher rate than any other code.

The Centers for Medicare & Medicaid Services (“CMS”) oversees claims submitted to the federal government for reimbursement. CMS contracts with third- party administrators like AdvanceMed to handle claims and review, investigate, and audit payments made on behalf of the federal government. CMS, through AdvanceMed, advises service providers on proper billing practices and may noti