Halifax ruling helps hospitals in False Claims lawsuits
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.