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January 15, 2015 Healthcare Fraud

Using Confidential Patient Information to Support a Qui Tam Case: What’s Allowed?

Patient records are considered highly confidential and are protected from unlawful dissemination by the Health Insurance Portability and Accountability Act of 1996 (“HIPPA”). However, in light of a healthcare fraud-based False Claims Act allegation, how do patient confidentiality laws intersect with the rights of plaintiffs to expose healthcare facilities alleged to be dabbling in wasteful false claims against Medicare and Medicaid?

In one recent case out of Pennsylvania, the District Court pondered this very inquiry – holding that while qui tam plaintiffs undoubtedly have a right to access and rely on certain patient records when filing a claim, the privilege is not a blanket right, and certain restrictions will apply.

Details of Notorfransesco v. Surgical Monitoring Assoc.

The underlying facts of the Notorfransesco case are fairly familiar. The plaintiff’s employer, Surgical Monitoring Associates, was allegedly submitting fraudulently inflated claims for reimbursement for services provided to patients enrolled in Medicare and Medicaid. However, to support this assertion, the plaintiff confiscated patient records, billing information, invoices, and customer billing rates – all of which the defendant contended violated the various confidentiality agreements executed by Notorfransesco pursuant to her employment as the billing manager.

As a result, the defendant counterclaimed by alleging (i) breach of contract; (ii) breach of implied contract; and (iii) promissory estoppel. Among other remedies, it is seeking an injunction against Notorfransesco to stop her from continuing to advance her qui tam lawsuit.

Court Considers Defendant’s Counter-Argument

The Court began its analysis with a fundamental threshold question: are these documents actually considered confidential? After a brief review of the language of Notorfransesco’s confidentiality agreement, the Court held in the positive – and concluded that the defendants had adequately pled their claim of breach of contract.

From there, the Court considered the sufficiency of the defendant’s pleadings with regard to damages, and reviewed plaintiff’s assertions that the pleadings used “bald boilerplate” language not actually related to quantifiable damages. Being that the case is merely in the summary judgment phase, the Court concluded that plausibility – not probability – is the standard, and defendant’s assertions will withstand dismissal.

Lastly, the plaintiff asserted that allowing this type of counterclaim in healthcare fraud-based qui tam lawsuits would undermine the entire False Claims Act system, and it should be against public policy to allow defendants the opportunity to rely on employee confidentiality agreements to avoid False Claims Act liability. To this end, it examined whether the defendant’s counterclaims amounted to a thinly-veiled indemnification claim, which would require a finding of False Claims Act liability first, followed by a claim by the defendant against the plaintiff. This sort of procedural maneuver, the court held, would violate public policy – however, it further held that this was not the nature of defendant’s claim in this particular case.

In order to better understand the proper analysis of the issue at hand, the Court reviewed several non-binding (but helpful) holdings from other jurisdictions. In sum, the Court found that several similar cases hinged on whether the documents involved were “reasonably necessary” for determining the outcome of the False Claims Act issue.

This type of determination is one requiring an examination into the facts — as opposed to the law — and the Court was not willing (or able) to make a ruling on this issue during the summary judgment phase. In sum, the Court held it was too early to determine if the documents are “reasonably necessary” for the resolution of the matter.

Contact Berger Montague Today

If you are considering a healthcare fraud lawsuit and would like more information about the best way to collect evidence in preparation for your case, please contact the experienced attorneys of Berger Montague today.