Healthcare trade groups seeking to halt federal fraud probes at teaching hospitals suffered a major setback last week when a judge dismissed their lawsuit against the government.
The Association of American Medical Colleges, the American Hospital Association, the American Medical Association and 18 other trade groups and hospitals sued the federal government last fall, protesting the way the government's Physicians at Teaching Hospitals probe was being conducted.
That investigation, known as PATH, began in 1995 and focuses on how teaching hospitals bill Medicare for services performed by residents. So far, four medical schools have settled with the government for a total of $68 million. About 50 PATH audits are believed to be under way.
The hospital groups contended in court documents that federal investigators were applying new billing standards retroactively and were coercing hospitals into "highly disadvantageous and unfair `voluntary settlements' " (Nov. 3, 1997, p. 4).
But during a brief April 27 hearing, U.S. District Judge Carlos Moreno in Los Angeles dismissed the case against the government, saying the plaintiffs had options other than litigation to address their concerns.
Robert Dickler, a senior vice president at the AAMC, said the group has a "natural inclination" to appeal the ruling but will wait to decide until a written opinion is issued.
Moreno is expected to publish his written opinion within the next few weeks. The provider groups will then have 60 days to appeal his decision.
The hospitals and trade groups filed the lawsuit last October. In January, 24 organizations joined the AAMC's lawsuit as plaintiffs, including the American College of Physicians and the Massachusetts Hospital Association.
Since then, the Greater New York Hospital Association in New York City has filed a federal lawsuit to stop PATH audits. That suit is modeled closely on the AAMC's complaint.
Susan Waltman, general counsel for the GNYHA, said that without a written opinion, it was difficult to comment on how the ruling would affect their case.
"It's a different circuit, a different judge and a different set of circumstances," Waltman said. "We clearly disagree with the decision."
The April 27 dismissal is the second such defeat for the AHA. The lawsuit it filed with the Ohio Hospital Association against HHS was dismissed by a federal judge in September. The AHA and OHA are appealing that ruling. That lawsuit challenges HHS' lab billing investigation, dubbed Project Bad Bundle, which resulted in settlements in excess of $20 million since 1997.