When the American Hospital Association sued HHS last week over one of its Medicare billing-fraud investigations, it marked the first time in more than six years that the Chicago-based hospital trade group became a plaintiff in a lawsuit against the government.
The last time the AHA filed such a suit was in April 1989, when it challenged the National Labor Relations Board's new collective bargaining unit rules for hospital workers.
The rules increased the number of bargaining units under which hospital workers could organize, and the AHA feared that additional categories would lead to increased union activity at hospitals.
Although the AHA won its case in federal district court, it lost in federal appellate court and before the U.S. Supreme Court, which upheld the legality of the new labor rules in a 9-0 decision. The rules took effect in May 1991.
The stinging defeat didn't make the AHA shy away from litigation for the next six years, AHA executives contend. It just happened that way, they say.
"Absolutely not" was the reaction of Fredric Entin, the AHA's general counsel, when asked if the association was afraid of going to federal court.
"There was no strategy or policy to stay out of court," Entin said. "We were prepared in a couple of instances to file suit, but they were resolved."
Entin said the AHA has become involved with a number of cases in which another association or hospital member already was the appropriate plaintiff. In those cases, the AHA has filed briefs in support of the plaintiffs' position.
Most recently, the association filed an amicus, or friend-of-the-court, brief in the Dubuque, Iowa, hospital merger case, urging the 8th U.S. Circuit Court of Appeals in St. Louis to uphold a lower court decision that cleared the merger of Dubuque's only two hospitals of any antitrust problems.
"We average about six or more amicus briefs a year on a variety of issues," Entin said.
But, in years past, the AHA was much more litigious. For example, it challenged the federal regulations that created Medicare peer review organizations, it challenged regulations that required hospitals to pay the costs of copying and sending patient records to Medicare PROs, and it challenged the "Baby Doe" regulations that allowed federal investigators to intervene in the treatment decisions regarding seriously ill newborns.
"We let circumstances dictate our approach," Entin said. "This was the first opportunity for us to challenge the government directly."
In the AHA's lawsuit, the association and the Ohio Hospital Association sued HHS in U.S. District Court in Cleveland, claiming that the agency, along with the U.S. Justice Department, has no legal basis to challenge hospitals' Medicare claims for certain outpatient laboratory tests (Oct. 7, p. 14). The government has targeted at least 150 of Ohio's 185 acute-care hospitals in the billing probe, and the AHA fears the investigation will spread nationwide.
According to the government, Medicare paid the hospitals for individual tests when the tests should have been billed for and paid for collectively. The AHA and OHA, in turn, contend the government didn't properly instruct the hospitals to bundle the tests in order to be reimbursed by Medicare.
The associations also are challenging the government's use of the federal False Claims Act to "coerce" hospitals into settling their alleged overpayments with the government. Violations of the False Claims Act carry much higher financial penalties, which the AHA and OHA say induce hospitals to settle rather than fight the allegations.
Assistant U.S. Attorney James Bickett in Akron, Ohio, said his office, which is coordinating the Justice Department's portion of the investigation, is not commenting on the lawsuit.
"We will respond in due course in federal court," Bickett said. The government has until early December to respond to the lawsuit.
The lawsuit will have no effect on the investigations, Bickett said: "We will proceed as we have been."
To date, at least nine Ohio hospitals have reached billing settlements with the government. Bickett said the government has tentative settlements with other Ohio hospitals, but he declined to say how many.
As for the AHA and OHA, each was looking independently at the billing investigation for outpatient laboratory tests, but the OHA contacted the AHA about joining the lawsuit, Entin said.
Entin said the AHA is helping finance the litigation costs, but he declined to disclose how much the AHA is spending or how the AHA and OHA are splitting the bill.
Meanwhile, one group's legal expense is another's marketing opportunity. Last week, the Healthcare Financial Management Association unveiled a training kit for hospital financial managers to help them comply with some complex Medicare billing regulations that are the subject of another government hospital fraud probe.
That investigation, which has been under way for nearly two years, focuses on hospital bills for diagnostic tests that the government says already are reimbursed as part of a patient's inpatient stay (Jan. 2, 1995).
For $495, the training kit, dubbed "DRG Watch," is an "affordable and timely alternative to hiring consultants to develop an in-house (billing compliance) program from scratch," according to the HFMA.
Wendy Herr, HFMA vice president, said the association's goal was not to make money, but she said the HFMA has to make a profit from the sale of each training kit to recover its costs of developing the program.
Every settlement reached under the investigation requires hospitals to retrain employees in proper Medicare billing techniques and to establish an internal billing compliance program to guard against billing problems in the future.