Halifax rul­ing helps hos­pi­tals in False Claims law­suits

Modern Healthcare - - NEWS - By Joe Carl­son

A federal judge in Or­lando, Fla., gave hos­pi­tals and health sys­tems a rea­son to cheer when he ruled that vi­o­lat­ing Medi­care’s con­di­tions of par­tic­i­pa­tion doesn’t au­to­mat­i­cally ex­pose providers to the triple dam­ages avail­able un­der the False Claims Act.

U.S. District Judge Gre­gory Pres­nell’s re­cent rul­ing in the case of Elin Bak­lid-Kunz v. Halifax Hospi­tal Med­i­cal Cen­ter bol­stered a grow­ing body of law around the False Claims Act that re­quires whis­tle-blow­ers to prove more than just vi­o­la­tions of Medi­care ad­min­is­tra­tive rules.

Max­i­mum dam­ages in the case were well above $200 mil­lion, but the whis­tle-blower and the Day­tona Beach, Fla., hospi­tal agreed to set­tle the case for $1 mil­lion this month af­ter Pres­nell’s sum­mary judg­ment un­der­cut the ar­gu­ments of Bak­lid-Kunz, the hospi­tal’s for­mer com­pli­ance di­rec­tor who filed the law­suit.

The pro­posed set­tle­ment still needs ap­proval from the Jus­tice Depart­ment and from Pres­nell.

Bak­lid-Kunz al­leged that be­tween 2002 and 2013, Halifax Health of­fi­cials sub­mit­ted 21,000 Medi­care bills for in­pa­tient care that should have been coded as less-ex­pen­sive out­pa­tient ser­vices.

Pres­nell ruled that if any dam­ages were avail­able, the sum would be the dif­fer­ence be­tween the in­pa­tient and out­pa­tient rates, which cut down the po­ten­tial dam­ages sig­nif­i­cantly.

He also ruled that the False Claims Act isn’t trig­gered just be­cause some of the pa­tients’ med­i­cal records lacked a valid doc­tor’s or­der to ad­mit the pa­tient.

“The court’s rul­ing is con­sis­tent with many other cases where courts have held that vi­o­lat­ing the Medi­care con­di­tions of par­tic­i­pa­tion reg­u­la­tions is not enough to es­tab­lish False Claims Act li­a­bil­ity,” said Jesse Wit­ten, a Wash­ing­ton part­ner with Drinker Bid­dle & Reath.

Even though Pres­nell’s de­ci­sion may have clar­i­fied the law in fa­vor of hospi­tal de­fense teams, health­care providers still may not see any re­sult­ing drop in the num­ber of False Claims Act law­suits.

Duane Mor­ris at­tor­ney Michael Clark, chair­man-elect of the Amer­i­can Bar As­so­ci­a­tion’s health law sec­tion, said changes to the law in 2009 and 2010 made it eas­ier to bring and main­tain False Claims Act cases against health­care providers.

But the law re­mains un­set­tled and the Halifax rul­ing will be widely cited, he added.

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