Seventh Circuit Victory for Qui Tam Relators

Keen and watchful citizens who become aware of possible Medicare billing fraud face a difficult road if they wish to bring a qui tam action on behalf of the government.  A quick scan of many recent qui tam cases makes it clear that plaintiffs’ qui tam suits are often dismissed at the trial court level, generally for technical problems that prevent the case from being considered on its merits.

Such a case was recently appealed and reversed by the United States Court of Appeals for the Seventh Circuit.  In U.S. ex rel. Goldberg v. Rush U. Med. Ctr., the relators alleged that a teaching hospital was improperly billing Medicare for supervised work by medical residents, when in fact the work in question was not supervised.  WL 1813694 (7th Cir. 2012).  Medicare allows billing for surgical and general medical work done by residents at teaching hospitals only when the residents are properly supervised by attending physicians.  The relators claimed that the attending physicians supervised many residents simultaneously, and thus divided their attention.  The relators claimed that this type of supervision is not covered under Medicare.

The case was dismissed at the trial level on the grounds that these practices were, essentially, common knowledge—the Department of Health and Human Services had conducted a study finding that most of the 125 teaching hospitals affiliated with medical schools billed for unsupervised Resident-performed services, thereby receiving double compensation.  The Government Accountability Office later confirmed this.

Because qui tam relators get a cut of government’s recovery, the Federal False Claims act states that suits cannot be based upon information available in public reports, unless the relator is the “original source” of the information.  The claim was dismissed at the trial court because the court believed that the relator’s allegations “tracked” with those in the public studies, and thus the claim was barred because the relators were not bringing original information.

Judge Frank Easterbrook, however, disagreed with this line of reasoning, noting that the reports were very general and merely showed that “most” teaching hospitals were billing fraudulently.  Judge Easterbrook highlighted the fact that the relators brought new information to light concerning the specific teaching hospital in question, and that the information could not have been deduced from reading the reports.  The relators in this case may or may not have been aware of these reports, but allowing the case to proceed encourages citizens investigate—to take general information from  public sources and report fraud that may be happening close to home—and to come forward.  Experienced counsel can help whistleblowers avoid the technical problems which could doom the complaint to failure in court.

Amanda Narvaes

Amanda P. Narvaes, a Partner, joined Drew Cooper & Anding in 2011. Ms. Narvaes is a civil litigator in the areas of complex commercial litigation, lender liability, copyright litigation, and consumer protection. She graduated cum laude from Carleton College with a bachelor’s degree in history. She earned her law degree at WMU-Thomas M. Cooley Law School, graduating magna cum laude, and received Cooley’s Distinguished Student Award. Ms. Narvaes represents clients before Michigan trial courts across the state and in the Michigan Court of Appeals, and before the United States District Courts for the Western and Eastern District of Michigan. Ms. Narvaes has been a guest speaker in Ron Foster’s “Litigation for Paralegals” class. Ms. Narvaes discusses differences between Federal civil discovery rules and Michigan civil discovery rules.