EXECUTIVE SUMMARY

The Department of Justice moved to dismiss several recent False Claims Act lawsuits based on alleged EMTALA violations. Medical/legal experts interviewed by ED Legal Letter say that:

  • Future similar lawsuits are possible, but unlikely;
  • ED providers should watch the lawsuits closely, since FCA actions linked to EMTALA violations are theoretically possible;
  • Refunding payments for encounters involving potential EMTALA violations eliminates liability under the FCA.

Two recent lawsuits, both filed in Mississippi, tested a novel theory of liability. Attorneys argued that the hospital did not provide stabilizing treatment or transfer as required by the Emergency Medical Treatment and Labor Act (EMTALA), rendering patient bills to the federal government actionable under the False Claims Act (FCA).1,2

“The lawsuits argue that had the regulators known about the EMTALA violations, they would not have paid for the care,” explains Timothy C. Gutwald, JD, a healthcare attorney in the Grand Rapids, MI, office of Miller Johnson.

The Department of Justice (DOJ) moved to dismiss the cases, both of which alleged FCA violations based on purported EMTALA violations.3,4 “These two FCA actions are good examples of the DOJ’s use of its authority to dismiss cases that lack merit and could interfere with agency goals,” says Derek Adams, JD, a partner at Feldesman Tucker Leifer Fidell in Washington, DC. In explaining its rationale, the DOJ wrote, “EMTALA violations typically involve turning patients away from a hospital emergency room rather than treating them and, thus, do not lead to the submission of any false claims to the government.”

One case was dismissed in March 2019, and the other is pending. “The False Claims Act was never intended to address every potential regulatory violation,” says George B. Breen, JD, adding that there are existing administrative remedies to address EMTALA violations. “The government apparently recognized this in taking the affirmative step to seek dismissal of these cases after it had declined to intervene in each of them,” says Breen, an attorney at Washington DC-based Epstein Becker & Green.

Previously, the DOJ used its authority sparingly to dismiss FCA actions brought by whistleblowers. Even baseless cases were allowed to proceed. “This caused healthcare providers to spend considerable resources defending against meritless claims,” Breen explains. The DOJ’s forceful rejection of the allegations in the recent cases suggest this is no longer the status quo, making additional similar cases unlikely.

“We might see another attempt, but I think it is wasted effort and money for the attorney. Most will avoid this theory of liability in the future,” says Stephen A. Frew, JD, vice president of risk consulting at Johnson Insurance Services and a Rockford, IL-based attorney.

It is equally unlikely a plaintiff attorney will use qui tam lawsuits (cases brought by a whistleblower who exposes fraud on the government) as a way to bolster malpractice cases, Gutwald says. “They are very complex and move much more slowly than your typical civil suit.”

FCA Theory a Stretch

Depending on the court where the action is filed, it is always possible there could be a different outcome if other FCA cases are filed. “But, overall, I think this FCA theory is a stretch,” says Mary C. Malone, JD, a partner at Hancock Daniel in Richmond, VA. Nonetheless, providers should continue to watch these lawsuits closely, Malone advises. “The Escobar decision really broadened the landscape for FCA claims in many respects.”5 Prior to that decision, FCA claims essentially were rooted in failure to meet certain conditions of payment, not Medicare Conditions of Participation. “But the post-Escobar standard makes it clear that failure to meet a Condition of Participation could create the basis for an FCA action — if that failure was material to the payment of claims by the government,” Malone adds.

EMTALA is tied to the Medicare Conditions of Participation. This could create the basis for false claims liability. “However, to date, making EMTALA violations the basis for FCA claims is not very practical and ultimately may be proved not to meet the Escobar materiality standard,” Malone says.

Currently, the government seems to prefer handling EMTALA violations through the administrative process and the associated penalties. “But if EMTALA ever did create the basis for FCA liability, the financial penalties could be much higher than current civil monetary penalties assigned for EMTALA violations,” Malone cautions.

Refunding payments is one way to eliminate any potential liability under the FCA. “If ED providers identify an EMTALA violation, a very conservative approach would be to either not bill for the services provided during that encounter, or to issue a refund to the government for any payment,” Gutwald says.

Whistleblowing in EDs

The primary cause of EMTALA citations is mandatory reporting by other hospitals that receive a patient who was improperly transferred under EMTALA. However, whistleblower cases do occur regularly, according to Frew. “To me, the most interesting part of the Delta Regional case is that the U.S. government did not bring the case.”

It was the ED’s trauma program manager who alleged that the hospital had created a de facto policy of not following EMTALA requirements for uninsured or Medicaid patients. “The employee attempted to profit by bringing a lawsuit for money and attorney’s fees, and failed,” Frew notes. Still, the fact the case was dismissed should not obscure an important message for EDs and hospitals.

“Intentional noncompliance with EMTALA is likely to offend the moral values of ED staff,” Frew underscores.

Hospitals can expect any whistleblower report to result in a Centers for Medicare & Medicaid Services (CMS) investigation. “That will be disruptive and potentially costly to the institution and can become the basis of malpractice claims against the physicians involved,” Frew cautions.

When providing EMTALA training to employees, EDs and hospitals should instruct employees to call the compliance hotline or notify their supervisor about any EMTALA compliance concerns, Gutwald advises. Any retaliatory action against the whistleblower by the institution or the ED is an additional violation of EMTALA, Frew warns.

“Retaliation cases have resulted in successful suits in some cases,” he says. In most qui tam cases, ED whistleblowers first brought their concerns to someone within their organization. Thus, says Adams, “it is almost always beneficial to have internal and meaningful avenues for employees to report complaints.”

Citations Available Publicly

While EMTALA-related FCA claims appear unlikely, some plaintiff attorneys use EMTALA as a type of discovery mechanism successfully. “The client suffers some type of harm connected to an ED visit. The attorney advises the client to file an EMTALA complaint, which will result in a survey,” Malone says.

If the survey identifies any deficiencies, the hospital’s citation then becomes publicly available information. Evidence that someone failed to follow hospital policy can be useful in a medical malpractice case. “Some courts allow these reports to come into evidence. Others do not,” Malone adds.

In Gutwald’s experience, CMS investigators respond very favorably to hospitals that investigate potential EMTALA violations and proactively address any identified issues with updated training or policy changes. It is important that any internal investigation or corrective action is protected by one or more privileges, Gutwald cautions. These include peer review, attorney-client, or attorney work-product. A judge in a malpractice or EMTALA lawsuit probably would not admit evidence of an investigation or corrective action anyway.

“But being able to invoke the attorney-client privilege puts ED providers and hospitals in a stronger position to prevent that,” Gutwald notes.

If an EMTALA complaint is made, investigators likely will review other ED charts. At that point, any unreported violations “can become very problematic,” Gutwald says. “Repeated violations definitely make the imposition of fines and other penalties more likely.”

REFERENCES

  1. United States ex rel. Vanderlan v. Jackson HMA LLC, Civil Action No. 3:15-CV-767-DPJ-FKB (U.S. District Court, S.D. Mississippi, Northern Division, Sept. 14, 2018).
  2. United States ex rel. Sibley v. Delta Regional Medical Center, Civil Action No. 4:17CV53-GHD-RP (U.S. District Court, S.D. Mississippi, Greenville Division, July 30, 2018).
  3. United States ex rel. Sibley v. Delta Regional Medical Center, Civil No. 4:17-cv-000053-GHD-RP (U.S. District Court, Northern District of Mississippi, Greenville Division, March 21, 2019).
  4. United States ex rel. Vanderlan v. Jackson HMA, LLC et al., Case No. 3:15-cv-00767-DPJ-FKB. Motion to Dismiss, filed Nov. 15, 2018.
  5. Universal Health Services, Inc. v. United States ex rel. Escobar et al., No. 15-7 (U.S. Supreme Court, June 16, 2016).