SCOTUS Ruling Could Increase Health Care Whistleblower Fraud Suits

A U.S. Supreme Court ruling on Tuesday could increase the ability of whistleblowers to file health care fraud lawsuits over allegations that previously had been brought to court, Modern Healthcare reports. However, the decision did not go as far as some industry groups had feared.

Background

The case -- Kellogg, Brown & Root Services v. United States ex. rel. Carter -- is not related to health care but has health care implications. At issue is whether former KB&R employee Benjamin Carter could sue the company under the False Claims Act. Carter alleged that KB&R billed the government for purifying and testing contaminated water services that it did not conduct. A federal district court ruled that Carter could not sue because the statute of limitations had expired and similar lawsuits had been filed. However, the U.S. Court of Appeals for the 4th Circuit in Virginia reversed the original ruling.

In September 2014, the American Medical Association, the American Hospital Association and Pharmaceutical Research and Manufacturers of America filed a brief with the high court saying that the lower court's ruling could extend statutes of limitation for all fraud cases indefinitely and allow whistleblowers to file repetitive lawsuits (Schencker, Modern Healthcare, 5/26). The groups wrote in an amicus brief that if the lower court ruling were to stand, it would "impose significant burdens on businesses, hospitals and other health care providers" (Schenker, Modern Healthcare, 1/9).

Ruling Details

The Supreme Court partially affirmed and partially reversed the 4th Circuit's ruling. They remanded the case back to the lower court.

The justices ruled that current law only extends the statute of limitations in times of war in criminal cases, but not for civil cases such as those filed under the False Claims Act.

However, the high court also ruled that the False Claims Act does not prohibit whistleblowers from filing cases that make the same allegations as a case that previously has been dismissed by a court, as long as the dismissal was for reasons other than the merits. Justice Samuel Alito wrote that the law only bars such claims from being filed when similar cases are currently "pending."

Reaction

AHA Deputy General Counsel Maureen Mudron said that the high court's decision not to extend the statute of limitations in fraud lawsuits is "good news for hospitals and for the fair administration of the law." She added, "The alternative would have resulted in efforts to revive decades-old stale civil claims, the vast majority of which would prove meritless, and impose significant unwarranted costs on health care providers."

Stakeholders had mixed reactions to the second major part of the Supreme Court's ruling. Larry Freedman, a lawyer with Mintz Levin who represents providers in False Claims Act cases, said it is a "big deal" that could lead to "tactical gamesmanship" by whistleblowers that "could impose a very serious burden on health care providers to defend in multiple actions."

David Chizewer, a lawyer with  Goldberg Kohn, said the ruling would "pave a wider path for the case that is most likely to be successful to see the light of day and not to be barred by an earlier filed case that may have had less of a chance of success" (Schencker, Modern Healthcare, 5/26).

CMS Planning New Fraud Tracking System

In related news, CMS is planning to create a system to comprehensively track enforcement actions taken against providers for potentially fraudulent Medicare claims, Modern Healthcare reports.

CMS currently has several reporting mechanisms for reviewing such claims. However, the agency wrote in a solicitation notice for a contractor to create and maintain the Provider Compliance Reporting system that "none of the existing reporting mechanisms allows for a comprehensive view of Medicare's activity with the CMS and its contractors."

The system would be available on ProviderMedicare.gov, which has not yet launched. According to CMS, the system would:

• "[A]llow Medicare review contractors and CMS staff to view a provider profile" that would indicate which claims have been marked for review and when providers have received one-on-one education; and
• Help make sure the same claim is not being reviewed by multiple Medicare contractors simultaneously.

Providers and the public will be able to view the information on the site, according to Modern Healthcare.

The deadline for contractors to submit a proposal for the fraud tracking system and for an outreach campaign for ProviderMedicare.gov is June 18. CMS plans to award a two-year contract by Sept. 30 (Dickson, Modern Healthcare, 5/26).