Ninth Circuit Invited To Weigh In On Public Disclosure Bar, Falsity

On October 8, 2019, a judge in the United States District Court for the Central District of California granted a stay and certified two questions for interlocutory appeal in relator Integra Med Analytics’ FCA suit against Providence Health & Services (“Providence”), its affiliates, and J.A. Thomas and Associates, Inc. (“JATA”), a clinical documentation consultant.  The case, on which we have previously reported here, involves allegations that Providence perpetrated an upcoding scheme whereby it trained its doctors to describe medical conditions with language that would support increasing the severity levels of the DRGs that Providence reported to Medicare, leading to inflated Medicare reimbursements.

On July 16, 2019, the court granted in part and denied in part the defendants’ motion to dismiss.  In so ordering, the court decided that it did not have enough information to decide whether information about JATA’s business practices, available from online sources, constituted “news media” within the meaning of that term in the FCA’s public disclosure bar, at 31 U.S.C. § 3730(e)(4)(A)(iii).  The court therefore denied the motion to dismiss based on the public disclosure bar.  In response, defendants asked the court to certify two questions for interlocutory appeal:

  1. Whether all online information is disclosed from the “news media” such that it would fall under the public disclosure bar of the False Claims Act?
  2. Whether Relator adequately alleged falsity under the False Claims Act?

The court certified both questions and granted the motion to stay.

In analyzing the motion for the appeals, the court listed the three elements that the moving party must satisfy to obtain certification: (1) the order giving rise to the appeal involves a controlling question of law; (2) there is substantial ground for difference of opinion; and (3) an immediate appeal from the order may materially advance the termination of the litigation.

With regard to the “news media” question, the court found that the order involves a controlling question of law.  First, the question involves an issue of law because resolving the issue requires an analysis of statutory construction—how courts define the “news media” provision in the FCA.  Further, the question involves a controlling issue of law, because if the JATA business practice information does come from the news media, the litigation would be materially advanced towards termination, because the public disclosure bar would apply to the claims.

Second, the court found that the “news media” question has room for substantial differences of opinion.  After all, the order on the motion to dismiss acknowledged that its approach represented a departure from the general consensus in the federal courts.

Third, the court found that the “news media” question, if resolved, would materially advance the termination of the litigation, because it could mean avoiding a “quite high” potential discovery burden on the defendants, given the quantity and complexity of the documents at issue.  In addition to the possible discovery burden, the defendants would have to coordinate with the Government, outside experts, and its own affiliates.

The court also certified the falsity question, which involved whether the relator adequately alleged falsity under the FCA through allegations that, based on statistical analyses, defendants’ hospitals used “MCC” (the billing code for a “Major Complication or Comorbidity”) for certain diagnoses at rates disproportionate to other hospitals.  The court found that the issue, a mixed question of law and fact, satisfied the first element of the certification test, because the issue constitutes a legal question material to the order.  Though mixed, the question nevertheless involves application of the legal standard for falsity to defendants’ statistical analyses.  Further, the question is material to the order—if the relator cannot “state a claim for falsity, its FCA claims fail.”

Next, the court held that there is substantial ground for differences of opinion.  The defendants pointed to a Western District of Texas case in which the court dismissed the same relator’s FCA claims because the court did not believe the relator adequately pleaded falsity with its statistical analyses.

Finally, the court found that the falsity question, if resolved, would materially advance the termination of the litigation because whether the relator has properly pleaded falsity is dispositive in an FCA case.

A copy of the Central District of California’s order can be found here.