A lower court should not have dismissed a relator’s complaint with prejudice because, although it was related to two other qui tam actions, those cases had settled and were no longer pending, the Seventh Circuit held May 19, 2010.
According to the appeals court, the instant complaint was related to two other qui tam actions and therefore fell within the 31 U.S.C. § 3730(b)(5) bar, which provides that “[w]hen a person brings an action under this subsection, no person other than the Government may intervene or bring a related action based on the facts underlying the pending action.”
But at the time the relator asked the court to reconsider the dismissal of her complaint, the related actions had settled and were no longer pending. For this reason, the district court should have dismissed the instant complaint without prejudice, giving the relator a chance to frame a new complaint that could be viable.
Relator Christine Chovanec brought the qui tam action under the False Claims Act against Apria Healthcare Group Inc., alleging the company fraudulently billed the Medicare and Medicaid programs for medical devices like oxygen tanks and related services that were unnecessary or should have been recorded under less expensive reimbursement codes. Chovanec alleged the fraud took place at Apria’s office in Morton Grove, IL from 2002 through 2004.
At the time Chovanec filed her complaint, two other qui tam actions against Apria also were pending—United States ex rel. Costa v. Apria Healthcare Group, Inc., filed in
California in 1998, and United States ex rel. Wickern v. Apria Healthcare Group, Inc., filed in Kansas in 1999. Both actions included similar allegations of “miscoding” and
“upcoding.”
The district court dismissed Chovanec’s action with prejudice, saying it was related to Costa and Wickern and was therefore barred under Section 3730(b)(5).
Four days later, the Costa and Wickern actions settled, with Apria agreeing to pay the federal government $17.6 million for reimbursement submitted from June 1995 through December 31, 1998.
Chovanec moved for reconsideration, arguing the settlement ended the prior actions and established a different time frame for the fraud than her action. The district court denied the motion.
The Seventh Circuit agreed that the three actions overlapped, even though the facts were not identical.
The appeals court found the Costa and Wickern cases alleged a nationwide fraud scheme involving inappropriate billing.
The Costa and Wickern complaints alleged “an ongoing fraud orchestrated by Apria’s national staff, the decision of any given office to participate in the scheme is related to the allegations,” the appeals court said.
But the appeals court went on to hold that because Costa and Wickern were no longer “pending” when the district court denied the motion to reconsider, Chovanec was entitled to file a new qui tam complaint.
The appeals court acknowledged the subsequent complaint may be barred for other reasons, such as if the allegations in the two related cases constituted public disclosures. In any event, the appeals court said, Chovanec should be given the chance to establish events in Illinois entirely unrelated to the national scheme of the 1990s, or a recurrence after the national fraud ended.
United States ex rel. Chovanec v. Apria Healthcare Group Inc., No. 06-1619 (7th Cir. May 19, 2010).
U.S. Court In Illinois Allows Ex Parte Interviews In FCA Case
A qui tam plaintiff may conduct ex parte interviews with patients of a physician alleged to have committed fraud, the U.S. District Court for the Northern District of Illinois held July 7, 2010.Defendant Danilo Del Campo, M.D. is a physician who practices dermatology and is the president of Chicago Skin Studio. Plaintiff Renata Block is a physician assistant who was employed by Del Campo.
Block brought a qui tam action under the False Claims Act (FCA) alleging Del Campo and Chicago Skin Clinic knowingly and intentionally submitted false claims and otherwise sought reimbursement for services allegedly provided to Medicare and Medicaid patients that were based on fraudulently generated and false documentation.
During discovery, defendant sought a protective order and the court placed significant limits on discovery of patient records.
Plaintiffs later sought ex parte contacts with present and former patients and defendant objected.
The court allowed the ex parte interviews. The court first rejected the defendant’s
contention that Block had not sufficiently demonstrated any factual support for her claims in order to proceed with further patient discovery.
“There is no requirement in the Federal Rules of Civil Procedure that Ms. Block support her claims with factual proof before being permitted to engage in further discovery,” the court noted.
Under Rule 26(b)(1), Block is entitled to discover any non-privileged matter that is relevant to her claims, the court held, finding the information Block seeks from Del Campo’s patients “meets this standard.”
The court also rejected defendant’s argument that such interviews are prohibited by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
“HIPAA does not prohibit ex parte communications with nonparty patients and former patients about their alleged medical care and treatment,” the court said.
Further, the court noted, the protective order “prohibits the parties from using or disclosing protected health information for any purpose other than in this litigation and
requires protected health information be returned to the covered entity or destroyed at the end of the litigation.”
Lastly, while the court acknowledged that it “may well be distressing and even
embarrassing for patients to participate in this bitterly contested lawsuit,” the defendants “have not shown that such concerns outweigh Plaintiffs’ need for the requested patient information.”