The American Hospital Association and other healthcare groups last week cheered a Supreme Court decision that will make it tougher for individuals to bring a false-claims lawsuit, while advocates of so-called whistle-blowers called the decision a snag in the fight against fraud.
In a 6-2 court ruling unrelated to healthcare but with far-reaching consequences for the industry, the Supreme Court tightened a key component of the False Claims Act that requires an individual to prove that he or she is the original source for a claim of fraud against the government. Its an important case from the perspective of anybody who gets money from the federal government, said attorney Daniel Westman, a partner at Morrison & Foerster in McLean, Va.
Hospitals, with their overarching ties to the federal government through Medicare and Medicaid, are potentially ripe for the types of lawsuits the Supreme Court just ruled on, Westman said.
For example, if a hospital employee witnesses a fraudulent act being committed in the hospitalsuch as a coder caught overbilling Medicarethat employee could file a false- claims lawsuit on behalf of the federal government and would be in line to recoup a percentage of any potential financial settlement.
But according to the Supreme Courts ruling, if that same employee had first seen a CMS investigator on the hospitals premises and then filed a lawsuit on the premise that something fraudulent was occurring, his or her claim on any financial returns becomes much more difficult to prove.
In other words, an individual who alleges wrongdoing against a government contractor must have first-hand knowledge of the behavior in order to file a lawsuit and claim damages, said Robin Conrad, senior vice president of the National Chamber Litigation Center, in a written statement.
The ruling appropriately sets limits and reduces the potential for abuse of the powerful financial incentives (dictated) under the statute, Westman added.
Maureen Mudron, Washington counsel for the AHA, lauded the Supreme Courts decision. It sets a rigorous requirement for the appropriate individual to bring a False Claims Act case, she said. And its very important because a false-claims case is an extremely powerful tool.