U.S. Supreme Court turns down chance to review False Claims Act standard

The U.S. Supreme Court building is seen in Washington
The U.S. Supreme Court building is seen in Washington, U.S., June 26, 2022. REUTERS/Elizabeth Frantz
  • Petitions sought clarity on details needed to allege healthcare fraud
  • Solicitor General told court there was no true circuit split

(Reuters) - The U.S. Supreme Court on Monday declined to hear three cases over whether whistleblowers accusing providers of defrauding the government must provide details about alleged false claims submitted by the providers.

Whistleblowers in all three cases had argued that fraud could be inferred from circumstances, even without details about false claims.

The Supreme Court's decision leaves in place a ruling by the 7th U.S. Circuit Court of Appeals allowing a whistleblower case to go forward against managed care company Molina Healthcare, and rulings by the 6th and 11th Circuits upholding the dismissal of whistleblower cases against home health provider Care Connection of Cincinnati and hospice provider Bethany Hospice & Palliative Care, respectively.

Following its usual practice, the Supreme Court did not explain the reason for its dismissal.

Tejinder Singh of Sparacino, who represents the whistleblowers in all three cases, declined to comment. Lawyers for the defendants did not immediately respond to requests for comment.

Illinois-based Molina was sued in 2017 by Thomas Prose, the founder of a former contractor for the company, who claimed that it improperly billed the state's Medicaid program for a higher level of care than it was actually able to provide its nursing facility residents. The difference in billing could be more than $3,000 per patient per month, he said.

A district court dismissed the case for failing to allege any specific false claims submitted to Medicaid, but a 2-1 7th Circuit panel revived it last year, finding that the circumstances Prose alleged were enough for his claims to survive a motion to dismiss.

The 6th Circuit's ruling stems from a 2015 lawsuit by nurse Cathy Owsley accusing Envision Healthcare subsidiary Care Connection of Cincinnati and its third-party coding contractor, Fazzi Associates, of systematically "upcoding," or billing government health insurance for more expensive services than it provided. The appeals court affirmed dismissal of the case on the grounds that Owsley had not provided enough detail about specific invoices she said were fraudulent.

The 11th Circuit, similarly, affirmed dismissal of a 2019 lawsuit accusing Georgia-based Bethany Hospice of paying kickbacks to doctors for referrals and then billing Medicare and Medicaid for services provided to those patients. The court found that whistleblower Jolie Johnson, who worked for Bethany as a marketer, had not alleged details about specific fraudulent bills.

The U.S. Solicitor General submitted briefs in the Care Connection and Bethany cases, saying the diverging outcomes in the circuits arose from differences in facts rather than a true split on the law, and urging the Supreme Court to deny the whistleblowers' petitions for certiorari.

The cases are Molina Healthcare of Illinois Inc et al v. Prose, No. 21-1145; United States ex rel Owsley v. Fazzi Associates Inc et al, No. 21-936; and Johnson et al v. Bethany Hospice and Palliative Care LLC, No. 21-462, in the U.S. Supreme Court.

For the whistleblowers: Tejinder Singh of Sparacino

For Molina: Anne Voigts of King & Spalding

For Fazzi Associates: Douglas Hallward-Driemeier of Ropes & Gray

For Care Connection: Stuart Gerson of Epstein Becker & Green

For Bethany Hospice: Michael Raupp of Husch Blackwell

Read more:

Molina must face claim of false billing for nursing home patient care

Justices want solicitor general to weigh in on Medicare 'upcoding' ruling

SCOTUS should stay out of False Claims Act dispute, says DOJ

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.