Medicare and Medicaid providers lie awake at night worrying about disgruntled—or worse yet, fired—finance officers filing whistleblower suits. After all, Medicare and Medicaid regulations are notoriously complicated, and False Claims Act (FCA) liability can carry a penalty of three times the amount of each bill, plus another $5,500 fine per bill. And the whistleblower gets a cut.
The nightmare proved real for Planned Parenthood of Los Angeles (PPLA) when its former (and fired) CFO turned whistleblower and claimed PPLA violated the FCA by billing Medicaid for contraceptives at the price it usually charged low-income women rather than at its own cost.
But last week the Ninth Circuit affirmed the dismissal of the suit because the CFO’s own filing proved that PPLA had expressly informed Medicaid that it was billing at its usual rate rather than at cost. And Medicaid had responded by acknowledging that its regulations were ambiguous and confusing and by declining to pursue the matter. Gonzalez v. Planned Parenthood of Los Angeles, 2014 BL 202597 (July 22).
The lesson? There are two. First, when a regulation is unclear, a provider may avoid or defeat an FCA action if it can document that it told Medicare or Medicaid exactly what it was doing. Second, fears about scorned CFOs are justified.