(Reuters) - Integra Med Analytics LLC has lost a bid to revive a whistleblower lawsuit against Washington-based healthcare system Providence Health & Services and its clinical documentation contractor Nuance Communications, the latest setback for Integra's efforts to bring whistleblower claims based on publicly available data.
The 9th U.S. Circuit Court of Appeals on Wednesday denied Integra's petition for rehearing en banc, letting stand a panel's ruling in March dismissing the lawsuit after a district judge had allowed it to go forward. The court did not give a reason for the denial.
"The conclusion by the Court of Appeals reflects a careful evaluation of the complaint's allegations and the relevant context, leading to its decision that dismissal was warranted," said Jessica Ellsworth of Hogan Lovells, a lawyer for Nuance, formerly known as J.A. Thomas & Associates.
Integra and its lawyer Jeremy Wells of Reid Collins & Tsai, and Providence and its lawyer Lloyd Bookman of Hooper, Lundy & Bookman, did not immediately respond to requests for comment.
Integra, a data analytics company, sued Providence and Nuance under the False Claims Act in 2017. It alleged that Providence, with the help of Nuance, was overbilling Medicare by submitting fraudulent secondary diagnoses for its patients.
The complaint relied largely on Integra's analysis of billing data, which showed that Providence billed Medicare more often for more lucrative secondary diagnoses or comorbidities than other hospitals.
Chief U.S. District Judge Philip Gutierrez in Los Angeles denied the defendants' motion to dismiss, and the defendants brought an interlocutory appeal in the 9th Circuit.
A three-judge panel -9th Circuit Judges Milan Smith and Mary Murguia and 6th Circuit Judge Danny Boggs, sitting by designation - reversed.
In their unsigned March 31 order, they said the alleged statistical discrepancy was not enough to support an FCA claim.
"Integra does not rule out an obvious alternative explanation, that Providence, with (Nuance's) assistance, was simply ahead of others in its industry," they wrote. "It is reasonable that Providence, one of the largest healthcare systems in the country, which specifically hired consultants to improve its Medicare billing, would be at the forefront of a national trend toward coding these relevant (major complications or comorbidities) at a higher rate."
The court did not reach a second argument by the defendants that the claims were blocked by the FCA's public disclosure bar because it was based on information available online.
Integra has in recent years sought to establish a new kind of FCA case, relying on data analysis rather than traditional lawsuits based on direct insider information. It suffered a major setback last year when the 5th Circuit upheld the dismissal of its lawsuit against a Texas hospital operator based on the public disclosure bar.
The U.S. Supreme Court declined to take up that case.
The case is Integra Med Analytics LLC et al v. Providence Health & Services et al, 9th U.S. Circuit Court of Appeals, No. 19-56367.
For Providence: Lloyd Bookman of Hooper, Lundy & Bookman
For Nuance: Jessica Ellsworth of Hogan Lovells
For Integra: Jeremy Wells of Reid Collins & Tsai
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