QUI TAM/FALSE CLAIMS

U.S. v. Battle Creek Health Sys., No. 04-1418 (6th Cir. Aug. 22, 2005)

A certified registered nurse/anesthetist brought a qui tam suit against a hospital, alleging that the hospital violated the False Claims Act by charging Medicare for entire multidose vials of anesthetic medication when less than the full vial of medication was administered. The hospital argued successfully to the district court that its policy of charging for entire multidose vials did not result in increased expenditures by Medicare because Medicare reimbursement payments for outpatients were based on a cost, not charge, basis. The hospital claimed it charged Medicare a "flat fee" for the vials and subsequently reimbursed Medicare for any overpayment during an end-of-year audit. The Sixth Circuit Court of Appeals found that the hospital's billing records did not reflect a uniform, "flat fee" charge to Medicare. Moreover, the court concluded that if the hospital made false statements during the interim payment phase of Medicare payments, it would not be immune from False Claims Act liability simply because it reimbursed Medicare after final settlement of the cost report.