In the context of False Claims Act lawsuits, there is much to be said about the initial complaint stage. As you recall, Circuit Courts of Appeal are split as to the level of specificity required for a False Claims Act filing. Some courts have concluded that Federal Rule of Civil Procedure 9(b) (hereinafter, “Rule 9(b)”) is to be strictly construed to require evidence of each and every instance of fraud. Other courts have concluded that the rule is not to be read so stringently, and evidence to support an inference of fraud is sufficient.
However, as is the case in today’s post, it is also possible for a whistleblower plaintiff to miss out on an opportunity for a successful case due to the contents of the initial complaint, including the failure to include a key component at the outset. In the case of Zeman v. USC University Hospital, the defendant was successful in having the entire case dismissed due to the plaintiff’s failure to plead her most pivotal claims in her original complaint. The following explains why, and offers guidance to others considering a possible whistleblower action.
Details of Zeman v. USC University Hospital
In a False Claims Act case brought in the United States District Court for the Central District of California, a Medicare beneficiary alleged that the USC University Hospital engaged in unlawful billing procedures with regard to its post-operative, follow-up care charges. According the complaint, the relator underwent orthopedic surgery at an ambulatory surgery center owned and operated by the USC University Hospital, but located adjacent to the facility in a separate building. The ambulatory center was historically run as an entity separate and distinct from the hospital until October 2009, when it was announced that the hospital would thereafter treat the ambulatory center as part of the hospital facility itself. Along with this announcement was the proclamation that patients could expect to receive two bills following service; one from the ambulatory center for the physician’s services and one from the hospital for overhead and technical services.
The relator – a Medicare enrollee – underwent an orthopedic procedure in November 2011. She was required to attend several follow-up appointments, and was charged several times (although not every time) for “office visits,” “clinic,” and “clinic services.” According to Medicare guidelines, a provider is prohibited from charging patients for routine follow-up visits for 90 days following a major surgery – a concept known as a “global surgical package.” Therefore, the relator alleged that the defendant’s charges amounted to false claims for reimbursement.
The relator was granted the opportunity to amend her complaint twice before ultimately meeting dismissal on summary judgment. According to the Federal Rules of Civil Procedure, a complaint must be dismissed if there is no genuine issue of fact alleged by the plaintiff. In other words, if the plaintiff fails to provide enough evidence of fraud in the complaint then the defendant is not sufficiently “on notice” of what it needs to defend against, and the complaint must fail. Here, the court concluded that – despite the relator’s best efforts – her complaint did not contain enough information to proceed. Specifically, the court held that relator’s complaint made no reference to the particular Medicare rule at issue, and did not properly classify the defendant as a provider covered within the purview of the Medicare rules. Pointing to the deficiencies, the court dismissed the action and refused to allow plaintiff the opportunity to amend her complaint a third time.
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At Berger Montague, we offer unparalleled representation in the areas of whistleblower lawsuits and False Claims Act claims. If you are aware of healthcare fraud or suspicious billing practices like those described above, contact our office right away.