U.S. ex rel. Herren v. Marshall Med. Ctr. – May 2015 (Summary)

FALSE CLAIMS ACT

U.S. ex rel. Herren v. Marshall Med. Ctr., No. 2:12–cv–00098–JAM–KJN (E.D. Cal. May 12, 2015)

The U.S. District Court for the Eastern District of California granted in part and denied in part a motion to dismiss in a lawsuit over illegal billing procedures. A nurse filed this suit against a hospital and two of its affiliated physicians, alleging a variety of issues with physician oversight, double billing, and billing for visits which never occurred. She claimed that she had repeatedly brought these concerns to the physicians and hospital administration, but had been told that the practices would continue. In addition, she claimed that the hospital had terminated her employment in retaliation for her actions.

The court dismissed the wrongful termination claims that the nurse had filed against the physicians and their medical practice. It emphasized that the nurse was not an employee, contractor, or agent of the physicians, and therefore could not pursue a wrongful termination claim against them. The court also dismissed several of the nurse’s claims over a lack of sufficient information. It explained that allegations of fraud must contain a sufficient degree of detail in order to survive a motion to dismiss, and determined that several of the nurse’s claims had failed to meet this standard.

However, the court concluded that some of the nurse’s claims contained enough information to survive a motion to dismiss. Specifically, it noted that she had provided sufficient facts to support allegations that the physicians knowingly billed for patient visits that did not occur and that the physicians had engaged in improper billing for certain kinds of medication.

The hospital raised numerous arguments in its defense. For example, it argued that it was exempt from the Medicare physician supervision requirements because it was a small rural hospital. It also claimed that it should not be held liable because it had reasonably believed it was in compliance with all applicable laws and regulations. The court disagreed. It found that there was no evidence that the hospital received a federal designation as a rural hospital during the relevant period, and it further noted that the hospital had never sought any kind of governmental review or approval of its billing practices. Also, the court ruled that the hospital could have violated both state and federal law by mixing expired drugs with viable drugs and giving the resulting mixture to patients for treatment.