Additional Details Not Sufficient To Save Complaint From Public Disclosure Bar

On March 22, 2017, the District Court for the Northern District of California dismissed a False Claims Act, 31 U.S.C. §3729 complaint against several hospitals for alleged Medicare, Medicaid, Tricare claims submission schemes.  United States ex rel. Cherry Graziosi v. Accretive Health, Inc., et al, No. 13-cv-1194 (N.D. Ill. Mar. 22, 2017).

The relator alleged that each of the Defendant hospitals submitted a claim for payment to federal health insurance programs for hospital admissions. When submitting this form, Relator alleged, the hospital must certify that inpatient admissions were determined to be medically necessary by a licensed physician with personal knowledge of the medical necessity.  She alleged that the hospitals submitted forms for reimbursement for inpatient treatment in circumstances where the Emergency or Hospital Staff physicians had previously determined that inpatient treatment was not required.  According to Relator, these fraudulent submissions were generated or recommended by Accretive Health, Inc., a consultant.

The Court dismissed Relator’s claims against Baptist Hospitals as precluded by the public disclosure bar.  The Federal Government had previously investigated Baptist during the 1980s and 1990s.  Additionally, audits performed of Baptist’s Medicare claims from 2008 and 2009 by the Office of Inspector General (“OIG”) had resulted in a publicly announced FCA settlement.  The Court found that Relator’s allegations were substantially similar to, and therefore based on, the allegations and courses of conduct described in the OIG audit and Department of Justice press releases.  The Court based its ruling on several factors: (1) the time frame of Relator’s allegations and their overlap with publicly disclosed schemes; (2) Relator’s failure to allege personal knowledge of the scheme; and (3) Relator’s failure to demonstrate that she was the original source of the information on which her claims against Baptist was based.  While Relator’s allegations included Accretive, a company that had not been disclosed previously as having assisted with the fraudulent billing practices, the Court noted that this sort of “extra detail” did not preclude application of the public disclosure bar.

The Court dismissed Relator’s claims against several other hospitals on the grounds that her allegations failed to meet the heightened pleading standard of Rule 9(b).  Relator alleged essentially the same scheme as to these additional hospitals.  Her only specific additional allegation was that the hospitals had entered an agreement with Accretive, the company she alleged had generated the false forms and recommended the changes. The Court found that Relator had failed to allege that the agreement required submission of fraudulent forms, how the agreements were implemented in a way that resulted in fraudulent submissions, or that Plaintiff had any personal knowledge of the claims submission process at hospitals where she had not worked and that were located in different states.

By contrast, the Court denied the motion to dismiss with regard to the hospital where Relator was actually employed, finding that relator alleged sufficient facts to allow a reasonable inference that false claims were submitted to the government.  Relator alleged nine specific examples of the Accretive recommending to the hospital to change the diagnosis to an inpatient admission.  Additionally, she alleged that she had personal knowledge of these instances as she communicated with both the advising company and emergency room staff as part of her job responsibilities.