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The Ninth Circuit holds that Unnecessary Hospitalizations May Lead to Liability Under the False Claims Act

Wed 8th Apr 2020, Blog

A recent opinion from the Ninth Circuit held that false certifications of medical necessity can give rise to liability under the False Claims Act (“FCA”).   In Winter v. Gardens Regional Hosp. & Med. Ctr., the Relator (or plaintiff Winter) was a registered nurse and director of care management at a hospital.  Winter claims she was fired from her job after raising questions regarding what she perceived to be medically unnecessary hospital admissions. One example was hospitalizing patients with conditions that could otherwise be treated outside a hospital setting with antibiotics. 

Winter brought her claims under the FCA, which prohibits a party from directly or indirectly making a statement or omission in connection with a claim for payment to a  government agency.  Winter’s claims centered on allegations that the defendants falsely certified that they were entitled to reimbursement from federal healthcare programs for the hospitalizations.  The theory posited by Winter is that because hospitalizations were unnecessary, claims for reimbursement were “false claims”.   

Medicare reimburses for in-patient hospitalization only if a physician certifies that it is required or reasonable and necessary.  “Medical necessity” is a question of fact and assumes doctors use sound clinical judgment.  The defendants argued that the Relator’s complaint could not survive because she failed to plead that the doctors statements regarding the medical necessity of hospitalization were “objectively false”.  The Ninth Circuit rejected that standard. 

The Court held that if a medical opinion “is not honestly held” or falsely implies “that inpatient hospitalization is needed to diagnose or treat a medical condition”, it may be deemed false under the FCA.  The court further held that alleged representations by the defendants satisfied the FCA’s materiality pleading requirement.

The Ninth Circuit’s decision reverses the dismissal of Ms. Winter’s complaint.

Ariana Seldman Hawbecker is a partner at Bienert Katzman with significant experience representing whistleblowers.  With the influx of federal tax dollars brought on by the Covid-19 crisis, whistleblowers will serve an important role in ensuring that federal tax dollars and grants serve their intended purposes.  If you have evidence of a company engaging in fraudulent conduct to obtain taxpayer dollars, you may have a claim under the False Claims Act.