A U.S. Supreme Court case involving water treatment, warfare and Iraq might not seem like litigation that would affect healthcare leaders.
But Kellogg, Brown & Root Services, Inc. v. United States ex. rel. Carter—which the court will hear Tuesday—could have major implications for providers and healthcare organizations, potentially leading to more lawsuits over alleged fraud, say some healthcare groups.
Concerns revolve partly around whether a high-court ruling could extend statutes of limitations for all fraud cases, opening up healthcare organizations to more lawsuits.
“Providers should be on very high alert for the possibility of this [a lower court's ruling on the matter] being affirmed,” said Larry Freedman, an attorney with Mintz Levin in Washington, D.C., who defends providers in false claims cases. “It really could have a very disruptive effect.”
The American Medical Association, the American Hospital Association and the Pharmaceutical Research and Manufacturers of America were among a number of groups that filed a brief with the Supreme Court in September arguing that a lower court's ruling has the potential to extend statutes of limitation for all fraud cases indefinitely. They also worry another part of the ruling could allow whistle-blowers to file streams of repetitive lawsuits, according to the brief.
But others say the lower court's ruling only applies to war-related fraud, and the Supreme Court is unlikely to address the statute-of-limitations issue for other cases in its ultimate ruling.
At issue in the case is whether a Kellogg, Brown & Root Services employee, Benjamin Carter, who worked in Iraq, can sue the company, now known as KBR, under the False Claims Act. Carter alleges the company billed the government for purifying and testing contaminated water when it was not actually purifying or testing the water.
Attempts to secure comment from KBR, which was a subsidiary of Halliburton at the time, were unsuccessful Thursday and Friday. Halliburton referred a request for comment to KBR.
A federal district court ruled that Carter could not sue because the statute of limitations had expired, and because previous suits making similar allegations had already been filed. But the U.S. Court of Appeals for the 4th Circuit in Virginia reversed that ruling.
If affirmed, the lower court ruling would “impose significant burdens on businesses, hospitals and other health care providers. These entities, many of whom provide needed services to Government agencies and those served by Government programs, will be forced to defend against stale, repetitive and frequently meritless claims,” according to the friend-of-the-court brief.
The AMA and PhRMA declined to comment further on the case and the AHA did not return a request for comment.
Lawyers for Carter, however, believe the statute-of-limitations portion of the ruling applies only to civil monetary frauds related to war, not other matters such as healthcare.
Legal experts differ in their opinions about how concerned healthcare organizations should be about the case.
Freedman argued that if the Supreme Court affirms the 4th Circuit's ruling, it could mean more lawsuits against providers.
“Obviously, it's costly and disruptive for a company to defend against the same allegation over and over again as people try to get some traction,” Freedman said. “It's another shift of enormous discretionary authority toward the Department of Justice … a shift of power toward a private relator to indefinitely bring actions against healthcare providers.”
But David Chizewer, an attorney with Goldberg Kohn in Chicago who works with whistle-blowers in false claims cases said it's unlikely the court will address whether the law applies only to war-related fraud cases or to all fraud cases, since that is not the question before the court.
“I would guess that even after the Supreme Court issues its decision in this case, there is still going to be ambiguity about whether the act tolls statutes of limitation, for example, in a healthcare context,” Chizewer said.
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