Healthcare providers and companies still could face more fraud lawsuits as a result of a case now before the U.S. Supreme Court, even though the justices did not address that issue during oral arguments Tuesday, experts say.
If the justices reverse a lower court ruling in the case, Kellogg, Brown & Root Services v. United States ex. rel. Carter, that could lead to an extension of the statute of limitations in many fraud cases, giving whistle-blowers more time to file cases. A reversal of the lower court ruling also could mean whistle-blowers would be allowed to file lawsuits alleging fraud even when similar lawsuits had already been filed and dismissed for reasons unrelated to the merits of a case.
“The bottom line for the healthcare industry is I think both pieces of this case are very important, and very important to watch,” said Kirsten Mayer, a partner at Ropes & Gray in Boston who defends providers. “The outcome on both issues could be significant for the healthcare industry.”
Neither the justices nor lawyers in the case discussed what the case could mean for the healthcare industry during Tuesday's oral arguments. At issue in the case is whether Benjamin Carter, a Kellogg, Brown & Root Services employee 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.
A number of healthcare organizations, however, have jumped into the arguments. The American Medical Association, American Hospital Association and Pharmaceutical Research and Manufacturers of America filed a brief with the Supreme Court in September arguing that a lower court's ruling in the case has the potential to extend statutes of limitations for all fraud cases indefinitely and allow whistle-blowers to file redundant lawsuits.
Lawyers for Carter, however, believe the statute of limitations portion of the lower court's ruling applies only to civil monetary frauds related to war, not other matters such as healthcare.
Though the court did not address that issue on Tuesday, the justices posed a number of questions to lawyers on the main issues of the case.
They seemed particularly focused on questioning Carter's lawyer about whether the statute of limitations should really be extended in wartime for civil cases or just for criminal ones, said David Chizewer, an attorney with Goldberg Kohn in Chicago who works with whistle-blowers in false claims cases .Carter's lawyers argue it should be extended for civil cases, such as those involving fraud, as well as criminal cases.
If the court rules that the statute of limitations should only be extended in criminal matters during wartime, then healthcare providers need not worry about more fraud cases, Chizewer said.
When it came to the second part of the case, whether whistle-blowers should be allowed to file multiple lawsuits alleging the same fraud, justices aimed much of their skepticism at lawyers for KBR. Justice Antonin Scalia did much of the questioning.
If the court rules that the law allows multiple lawsuits alleging the same fraud to be filed (as long as previous lawsuits were dismissed not based on merit), it could increase the chances healthcare providers will “face serial cases,” Mayer said.
Of course, there's a possibility, Chizewer said, that the court may not rule on the second part of the case if it rules in the first part that the statute of limitations only can be extended in criminal, not civil, actions during wartime.
But, for now, healthcare organizations should continue to pay close attention to the case and its upcoming ruling, Mayer said.
“The healthcare industry has been, of all the industries, the industry that has the highest volume of False Claims Act cases filed against it in any given year,” Mayer said. “Both questions at issue in this case have implications for healthcare.”
Follow Lisa Schencker on Twitter: @lschencker
