Hospital finds it pays to fight fraud charges
Case dragged on for 16 years
With healthcare facilities defending themselves from all manner of civil cases and federal prosecution, a big win for a provider is reason to celebrate. The recent victory for George Washington University (GWU) Hospital in Washington, DC, is welcome news, even if it took 16 years.
In 1998, four certified registered nurse anesthetists (CRNAs) formerly employed by GWU filed a lawsuit claiming that the hospital submitted false claims to Medicare for reimbursement of anesthesia procedures. The claims were fraudulent, they alleged, because GWU regularly said the anesthesia procedures had been performed entirely by a licensed anesthesiologist when parts of the anesthesia process had been performed by residents or CRNAs.
The allegations led to a qui tam case in which the federal government joined to claim that the hospital had defrauded the government of Medicare funds because of improper coding for the anesthesia services.
GWU was represented by William D. Nussbaum, JD, and Jonathan L. Diesenhaus, JD, of the law firm Hogan Lovells in Washington, DC. They declined to comment on the victory and GWU also refused, except to say they were pleased with the outcome.
The judge's ruling in the case suggests that the years of haggling eliminated so much evidence that the case just fell apart, says Nicholas D. Jurkowitz, JD, a healthcare attorney with the law firm of Fenton Nelson in Los Angeles who represents healthcare facilities. Whatever evidence was left after both parties argued over admissibility was insufficient to sustain the case, he says.
The outcome suggests that, despite the False Claims Act and qui tam, individuals face significant obstacles when suing such a large institution, Jurkowitz says. "The institution is a much bigger entity and has far more resources for fighting, but in addition, all of the information is within the institution," he says. "The hospital has all the information. For the individuals, even if they have seen something and have some knowledge, it is harder for them to access this information and move forward."
The outcome of the case should be heartening to managers who fear that individuals can make claims against a hospital and then have the federal government jump on board with a bias toward finding fraud, says Mark Kadzielski, JD, an attorney with the law firm of Pepper Hamilton in Los Angeles. "This is a decision that we have seen in other cases where allegations have been made but were not proven under the False Claims Act, and plaintiffs were procedurally given the chance to put up or shut up," he says. "If they can't, then the case is thrown out. This is reassuring in a sense that you can't take a large institution to court with allegations like this and expect there to be some assumption of fraud or some largesse in terms of a settlement."
Plaintiffs in the GWU case were hampered in part by their own expansive allegations of fraud, which required gathering records from numerous physicians and patients that went back to 1989, before the current GWU management and before current methods of document storage, Kadzielski notes.
Sixteen years is an extremely long time for such a case to drag out, and Jurkowitz points out that even the victory must have cost GWU a fortune in legal expenses. Even with in-house counsel, such litigation usually is handled by outside attorneys, he notes.
Managers should take the GWU case as a reminder to assess their own compliance programs, Jurkowitz says. In particular, he suggests assessing whether there is a mechanism in place, a person who can be contacted easily and without fear of repercussion, when a low-level employee suspects fraud. "Sometimes people at the bottom of the totem pole are reluctant to speak up, especially if there is no easy way for them to report it without putting themselves in jeopardy," he says. "Their fears might be overcome if they realize they can file suit and potentially reap a big reward."
Fighting early might be best chance
The case is a reminder that the hospital must take an aggressive stance with fraud charges from the beginning, says Mark H.M. Sosnowsky, JD, an attorney with the law firm of Drinker Biddle & Reath in Washington, DC. Don't focus so much on the potential liability that you are moved to settle or admit wrongdoing before making the plaintiffs prove their claims, he says.
Case law has given the government some advantages when litigating false claims, but hospitals still can demand that the plaintiff prove individual allegations, Sosnowsky notes. Often the hospital's best opportunity comes in the motion-to-dismiss stage, when it can aggressively demand proof and have some allegations thrown out. After that stage, the fight gets more difficult and more expensive.
"You have to make the relator demonstrate their case early on, and in this case the hospital did file motions for dismissal and whittled down the allegations to the point that it won on summary judgment," he says. "These cases are imminently winnable, but you do have to have the stomach for this kind of fight and the potential for significant damages. That is what makes litigating a case like this extremely risky."