Court Says No Special Treatment for Medical Opinion in False Claims Act

Though subjective, a medical opinion can still be proven “false” under the federal False Claims Act, a federal appellate court has ruled.

“A doctor’s clinical opinion must be judged under the same standard of any other representation,” the Ninth Circuit Court of Appeal said in a case involving a suit alleging Medicare false claims practices. “A doctor, like anyone else, can express an opinion that he knows to be false, or that he makes in reckless disregard of its truth or falsity.”

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The suit, a qui tam action pursued on behalf of the federal government by a fired hospital care management director, alleges that the hospital where she had worked experienced a spike in admissions when the owner/operator of nursing facilities gained an ownership interest in the management company overseeing operations at the hospital.

(As is common in appellate decisions, all the facts used in Winter v. Gardens Regional Hospital, et al., are taken from the plaintiff’s complaint and assumed true. They have not yet been actually assessed by a finder of fact.)

The plaintiff, Jane Winter, claims that the emergency room at Gardens Regional Hospital saw an unusually high number of patients transported from nursing homes owned by RollinsNelson LTC Corp., which was also a new 50-percent owner in the management company at Gardens Regional. Based on an increase in the number of Medicare beneficiaries being admitted, Winter alleged RollinsNelson and the management company “exerted direct pressure on physicians to admit patients to [Gardens Regional] and cause false claims to be submitted based on false certifications of medical necessity.”

Prior to her termination, Winter, a registered nurse, reviewed hospital admissions using the InterQual Level of Care Criteria. In the month following the management ownership change, 83.5 percent of the patients transported from RollinsNelson nursing homes were admitted as inpatients to Gardens Regional – an unusually high number in Winter’s experience and judgment. Winter also alleged that in the month after the change in management, the number of Medicare beneficiaries surpassed that of any month prior.

In her complaint, Winter details 65 separate patient admissions that allegedly did not meet Garden Regional’s admissions criteria and were unsupported by the patients’ medical record. The complaint alleges that none of the 65 admissions were medically necessary as required under Centers for Medicare & Medicaid Services (CMS) rules. She alleges that between mid-July and early September 2014, Gardens Regional submitted more than $1.2 million in false claims to the Medicare program. She claims that efforts to bring her findings to the attention of hospital management were unsuccessful and that when she was fired in November, she was replaced with an employee who never questioned any inpatient admissions.

The defendants sought a dismissal of the complaint and argued that the plaintiff “has alleged nothing more than her competing opinion with the treating physicians who actually saw the patients at issue.”

The federal district court judge dismissed plaintiff’s complaint and held that “to prevail on an FCA claim, a plaintiff must show that a defendant knowingly made an objectively false representation.”

On appeal, the Ninth Circuit focused on the district court's insistence that a representation must be “objectively false” to trigger liability under the FCA.

“The Medicare program trusts doctors to use their clinical judgment based on ‘complex medical factors,’ but does not give them unfettered discretion to decide whether inpatient admission is medically necessary,” the court explained.

“A physician’s certification that inpatient hospitalization was ‘medically necessary’ can be false or fraudulent for the same reasons that any opinion can be false or fraudulent,” according to the unanimous three-judge panel. “These reasons include if the opinion is not honestly held, or if it implies the existence of facts – namely, that inpatient hospitalization is needed to diagnose or treat a medical condition, in accordance with accepted standards of medical practice – that do not exist.”

In overturning the lower’s court’s dismissal and sending the case back to district court, the Ninth Circuit said that under CMS regulations, medical necessity is a “question of fact” and that a physician’s order “gets no presumptive weight.”

The Ninth Circuit acknowledged the defendants’ warning of increased liability exposure under the rule argued by the plaintiff. The appellate court said, however, that such arguments “cannot supersede the clear statutory text” and that the court’s role is to “apply, not amend, the work of the People’s representatives.”    

Gordon Ownby is CAP’s General Counsel. Questions or comments related to “Case of the Month” should be directed to gownby@CAPphysicians.com.