In late March, the United States Court of Appeals for the Ninth Circuit revived a whistleblower lawsuit under the False Claims Act (FCA) in which a former employee accused a healthcare provider of submitting reimbursement claims to Medicare for hospital stays that were purportedly “medically unnecessary.” The Ninth Circuit reversed the trial court’s dismissal of the complaint, holding that patient admissions were not automatically outside the FCA’s purview.
The case is Winter ex rel. United States v. Gardens Regional Hospital and Medical Center, Inc., No. 18-55020 (Mar. 23, 2020) (Winter). The relator-whistleblower was Jane Winter, a registered nurse that claimed to review the hospital’s inpatient admissions using criteria that the hospital had established. The nurse claimed to have noticed a spike in admissions shortly after an operator of skilled nursing facilities acquired a stake in the hospital management company. She purportedly identified more than five dozen admissions that did not meet the hospital’s admission criteria, and further observed that the hospital admitted an exceedingly high percentage of patients who arrived from skilled nursing facilities that were affiliated with the co-owner of the hospital management company. She was allegedly terminated after she brought her concerns to hospital management. In her FCA lawsuit against the hospital, she alleged that the hospital had submitted claims to Medicare in which it falsely certified that certain patient hospitalizations were medically necessary.
The trial court in Winter dismissed the plaintiff’s lawsuit against the hospital before pretrial discovery could occur. The trial court found that, even if all of the plaintiff’s allegations were true, the plaintiff had not stated an FCA claim against the hospital because her allegations were based on a disagreement between medical opinions as to patient admissions and could not, therefore, be proven to be “objectively false.”
On appeal, the Ninth Circuit reversed the trial court and held that “objective falsehood” allegations were not required to state an FCA claim at the pleading stage. The Court held the FCA was broader than common law fraud, which precluded certain types of professional opinions serving as a basis for a fraud claim. The Ninth Circuit concluded that a physician’s certification of medical necessity for inpatient hospitalization “can be false or fraudulent for the same reasons any opinion can be false or fraudulent” if those opinions are not honestly held, or if they imply the existence of facts that do not exist. The Ninth Circuit focused on allegations that hospital management had pressured physicians to increase admissions and highlighted corroborating statements allegedly made by one physician.
The Ninth Circuit reasoned that Winter did not conflict with the “objective falsehood” requirement in the Eleventh Circuit Court of Appeals decision in United States v. Aseracare, Inc., 938 F.3d 1278 (11th Cir. 2019), because the Aseracare decision was predicated on findings of fact after a trial, in which the evidence involved a dispute over the medical judgment of predicting the deterioration of a patient’s condition to warrant hospice care—there was no proof of undue influence or pressure. By contrast, the complaint in Winter alleged that medical decisions were being directed and influenced by new ownership for financial gain, which led doctors to falsify the certifications for admission of patients.
It is important to note that this case was decided at the pleading stage, and the court assumed the truth of the assertions. Winter appears to align with decisions from the Third, Fifth, and Tenth Circuits that expressly or implicitly rejected defendants’ challenge that Aseracare’s “objective falsehood” was a requisite element that must be pled in the complaint to survive a motion to dismiss. The Ninth Circuit concluded that Aseracare “did not necessarily apply to a physician’s certification of medical necessity” and, in any event, addressed a different stage in a case, where evidence had been presented and the dispute of falsity was based, solely, on a reasonable disagreement between physicians “without more.”
A copy of the Ninth Circuit’s decision in Winter ex rel. United States v. Gardens Regional Hospital and Medical Center, Inc. can be found here.
