A recent federal appeals court decision interpreting the federal False Claims Act may provide new support for whistleblowers.
In reinstating a $1.3 billion, 7-year-old False Claims Act lawsuit in Minnesota, a three-judge panel from the 8th U.S. Circuit Court of Appeals, St. Louis, made it easier for professional associations or other groups to file whistleblower lawsuits based on information gathered by their members.
The appeals panel ruled that the Minnesota Association of Nurse Anesthetists had standing to sue about 60 anesthesiologists, several hospitals run by Allina Hospitals and Clinics, Minneapolis, and 669-bed St. Cloud (Minn.) Hospital (Jan. 21, p. 7). The nurses' association accuses the doctors and hospitals of defrauding Medicare by billing for the doctors' time at the more expensive "personally performed" rate, instead of the "medically supervised" rate that covers the time anesthesiologists spend supervising nurse anesthetists. The nurses alleged the doctors were barely present during the procedures.
The defendants have denied the charges. They have announced no decision on whether to appeal the case to the full appeals court or the U.S. Supreme Court. If they do not appeal, or if they lose their appeal, the case will go to trial in U.S. District Court in Minneapolis. No trial date has been set.
David Stone, a lawyer for the nurse anesthetists, said organizations were granted standing as whistleblowers and considered "original sources"-that is, legal parties that first bring evidence of fraud to the government's attention-in the course of other cases.
"But no court has ever directly said in an opinion that organizations can be original sources," Stone said. "It's never been addressed until now."
Mark Kleiman, a whistleblowers' attorney based in Los Angeles, agreed that the opinion will spur more whistleblowers to come forward, at least in the states where the opinion has force. Unless the Supreme Court rules on an appeal in the case, the appeals court's opinion applies only to cases in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota.
"It's one thing when you have John or Jane Doe against the massive attack of a 600-person defense law firm," Kleiman said. "It's another thing when you have the California Nurses Association or another group that has the resources to dig in and fight back. To the extent that you see organizations involved, you're going to see something of a more-level playing field, so you don't have a lone (plaintiff) going up against a nursing home chain worth $40 billion."
Kleiman also predicted that the ruling would result in more cases alleging false claims because a hospital or nursing home has failed to provide the level of care Medicare requires.
Defense attorneys placed less importance on the ability of associations to sue. John Boese, a defense lawyer with the firm Fried Frank Harris Shriver & Jacobson, Washington, said this aspect of the ruling is more important as a matter of policy than of law. Giving associations standing as whistleblowers provides them with another opportunity to do political and economic damage to their opponents in the marketplace, and Boese argued that's bad policy.
"Individuals tend not to wage battles. They tend to (blow the whistle) mostly for the money. This is not done for the money. It's done to get a political or economic advantage over another group," Boese said. "I don't think the False Claims Act should be a political chit for one group over another."
Even more worrisome to Boese was the appeals court's reading of the merits of the case. Boese argued that the court's ruling is a nightmare for providers because it applies a 1999 ruling that allows false claims to be based on "ambiguous regulation" to complex Medicare regulations.
Allina spokeswoman Kendra Calhoun echoed those concerns when the ruling was made: "These (Medicare) rules and regulations are so very, very vague sometimes, if the (trial) court decided against our hospitals, there's no such thing as an honest mistake. It would be kind of a tremor throughout the industry."