Thursday, November 19, 2015

Applying a "We're-Just-Not-Buying-It" Standard in False Claims Act Retaliation Cases: Jones-McNamara v. Holzer Health Systems

Dear Readers:

False Claims Act ("FCA") retaliation cases are increasingly common. And, a plaintiff does not have to allege very much to bring a FCA retaliation claim and defeat a motion to dismiss: Rule 9(b)'s requirement that the plaintiff plead fraud with particularity does not apply to retaliation cases, so the bar for a plaintiff to successfully state a FCA retaliation claim is often quite low. The FCA's anti-retaliation provision, 33 USC 3730(h), protects former employees who were discharged "because of lawful acts done . . . in furtherance of an action under [33 USC 3729] or efforts to stop 1 or more violations under this subchapter." Essentially, it protects "all efforts [by an employee] to stop" an FCA violation, including where the employee was simply collecting information about a possible fraud. Jones-McNamara v. Holzer Health Systems, 2015 WL 6685302 *4 (6th Cir. Nov. 2, 2015).

Yet, even with a permissive standard for bringing retaliation claims, the 6th Circuit recently instructed that there is a limit to the deference afforded plaintiffs in retaliation cases. As the Court found in Jones-McNamara, to show that an employer retaliated against an employee, the plaintiff must first "show that allegations of fraud [committed by their employer] grew out of a reasonable belief in such fraud." Translation: the Court isn't just going to allow a plaintiff to cast anything done by the employer as a potential fraud; a plaintiff's belief that his or her employer committed a fraud in violation of the FCA must be objectively reasonable.

In Jones-McNamara, a hospital compliance officer alleged that the hospital violated the Anti-Kickback statute ("AKS") and FCA because a patient transport company with whom the hospital had been dealing had given one of the hospital's emergency room physicians a "jacket valued at $23.50" and had provided "free hotdogs and hamburgers" at the hospital's "employee health and wellness fair" that was held in 2008 and 2009. Applying what appears to be a "we're just not buying it" standard, the 6th Circuit in a 2-1 decision found:  "It cannot plausibly be suggested that one jacket valued at $23.50 and occasional servings of hotdogs and hamburgers could induce a reasonable person to prefer one provider over another. In fact, these items represent such a low monetary value they can only be characterized as 'token' gestures of good will under OIG guidance." Contrasting the plaintiff's complaint with the litany of serious and exorbitant entertainment featured in HHS-OIG reports and reported cases, the Court observed: "[i]t is ludicrous to believe that a person would be tempted to make illegal referrals in exchange for a couple hotdogs once a year."

The Court challenged the plaintiff's attempt to cast these de minimis gifts as giving rise to anti-kickback violations because the plaintiff had not shown any connection between the "gifts" and any alleged referrals by the hospital to the patient transport company. Moreover, the Court complained that the plaintiff had not shown that the employees who ate the hotdogs or the physician who received a jacket were even in a position to make referrals on behalf of the hospital to the patient transport company. While the plaintiff claimed that the physician who received the jacket was in a position to make referrals, the Court observed that the plaintiff provided no evidence that was in fact true --the plaintiff just wanted it to be that way. As the Court observed further, the plaintiff reported that the hospital violated the AKS based on her "unquestioned, unconfirmed, and thus unreasonable assumption that [the doctors] not only had the authority but in fact routinely made the decision to refer business to [the transport company] in knowing and willful return for illegal kickbacks" --an allegation that had no factual basis.

Jones-McNamara is a helpful decision for defending FCA retaliation cases. First, the Court essentially says that isolated de minimis gifts simply will not give rise to an anti-kickback violation and that complaints about such gifts by an employee as being "fraudulent" certainly do not qualify as reasonable evidence that the employer is engaged in fraudulent conduct. Second, and as importantly, the Court further suggests that district courts should closely scrutinize the assumptions made by plaintiffs who allege that their employer committed fraud and determine whether such accusations are reasonable or plausible. Here, the Court simply did not find it reasonable or plausible that eating hotdogs or accepting a single jacket provided by a vendor would lead hospital employees to engage in serious violations of the law. 

A. Brian Albritton
November 19, 2015

Thursday, November 5, 2015

Striking Government Experts in Health Care False Claims Act Cases: U.S. ex rel Lawson v. Aegis Therapies, Inc.

Experts play a crucial role in False Claims Act cases involving disputes over whether a provider's claims for reimbursement by Medicare violate Medicare rules and regulations. If both sides, relator/government and the defense, have experts, then unless an expert's testimony is stricken or limited, the dueling opinions of experts will often create issues of fact and thereby prevent either side from obtaining summary judgment. Moreover, courts frequently give experts wide latitude in expressing their opinions under the rubric that expert opinions will "assist the trier of fact" even though an expert's opinions and methodology may be highly suspect.

A case that recently demonstrated that the tolerance for experts --in this instance, government experts-- is not limitless and that refused to permit experts to testify on the grounds that their testimony would not help the jury is U.S. ex rel Lawson v. Aegis Therapies, Inc., 2015 WL 1541491 (March 31, 2015, S.D. GA). In this instructive case, the Court struck the testimony of two government Medicare experts on the grounds that they essentially applied an incorrect and more stringent regulatory standard to evaluate the defendants' Medicare billing practices. Moreover, the Court refused to permit one expert to recast and equate that more stringent standard as the correct regulatory standard "based on her personal experience." 

In Aegis, a relator brought a False Claims Act case against a skilled nursing facility ("SNF") and a rehabilitation therapy company which provided services to the facility's residents. Among other things, the relator claimed that the SNF provided medically unnecessary care to the residents, and as a result, submitted false claims for reimbursement to Medicare. The government intervened in the case, and it retained two experts, a physician and a nurse practitioner, both of whom opined that out of a random review of 30 patient files, 29 patients had received medically unnecessary rehabilitative care.

The defendants moved to exclude the testimony of these two experts, alleging that they employed the "wrong standard" to determine what constitutes "reasonable and necessary" medical services in their evaluation of the SNF patients' medical records. Essentially, the defendants challenged the "reliability of the experts' methodology and the helpfulness of their testimony to the jury." The Court agreed and struck the government's two experts, finding that their testimony was "not based on a reliable methodology and it will not assist the trier of fact in determining a material factual question."

The Court's decision to exclude the experts turned in large part on what standard was to be applied to determine "what level of improvement [for the patient] is required for a skilled service to be necessary" and covered under Medicare. The Court found that the applicable Medicare standard for determining whether "reasonable and necessary medical services" were provided to patients depended on whether there was a reasonable expectation that the service being provided (e.g., speech-language pathology services, physical therapy, occupation therapy) will cause the patient to "improve materially in a reasonable and generally predictable period of time." Instead of applying this "material improvement" standard, the government's experts applied a different standard. In assessing whether the defendants had provided medically necessary services to the patients, the government's experts evaluated whether the services provided to the SNF's patients caused a "significant practical improvement" in the patient's condition. This later standard, the Court observed, had a "different meaning on its face than the applicable 'material standard.'"

Though the evaluating standards for what constitutes a reasonable and medically necessary service were different on their face and derived from different parts of the Medicare program (Part A and Part B), the government argued that the experts' use of the "significant improvement" standard, though different legally than the "material improvement standard," essentially meant the same thing in the "ordinary sense." In turn, one of the government's experts assured the Court that she had, "in fact, applied the correct standard." The Court was having none of it. The Court observed that "using a standard --either in its regulatory sense or in its ordinary sense-- that is decidedly at odds with the actual governing standard" does not assist the trier of fact to determine the facts at issue in the case. In fact, such testimony, the Court went on, could "confuse or mislead the jury" such that the risk of confusing the jury outweighed "any potential benefit" from the testimony.

Having stricken the government's experts, the Court granted summary judgment to the defendants in part based on the government's failure to show that the defendants had, in fact, submitted false claims to Medicare.

The Aegis case is a remarkable decision. First, the Court clearly took the time to review the complex Medicare law, regulations, and manuals at issue. It did not throw up its hands at the complexity of the issues, but instead sifted through it and the testimony to come up with a well reasoned decision as to what legal standard should be used to determine whether the Medicare services provided were medically necessary, i.e., the standard for determining whether the Medicare claims at issue were false. Second, in so doing, the Court did not defer to the experts on the issues of law "as applied" in the context of deciding whether a particular service provided to patients was medically necessary. Third, in Lewis Carroll's book, Through the Looking Glass, Humpty Dumpty says, "When I use a word . . . it means just what I choose it to mean -- neither more nor less." The Court rejected that approachThe terms, "material' and "significant," are not fungible nor may they be interpreted to mean the same when used in the "ordinary" way. 

A. Brian Albritton
November 5, 2015