Friday Feature: 2 Court Cases

As I close the week, I’ve been following a lot of legal news, specifically court cases involving health care and in one case, a decision from the Supreme Court. Legal news can be rather arcane and boring but, in some cases, the implications of decisions can be rather profound. Such is the case (no pun intended) with the two I am highlighting here.

The first is a case out of New Jersey, the New Jersey Superior Court Appellate Division ruled that health care providers that have an internal investigatory process for self-discovered errors, negative outcomes, adverse events can have the results of the investigation, shielded or kept private from discovery or admission into evidence.

The case began when two SNFs refused to provide the State with investigations and findings conducted internally. The State (New Jersey) argued that the information should be made public, as in one case, the event was not a reportable event to the State. Pause here for a second and give that logic some thought.

The Court said that providers can protect non-reportable information and that state law allows for internal, self-critical discovery and deliberation as related to the normal course of its business, within the applicable regulatory framework. In other words, the regulations for SNFs in New Jersey and federally, allow facilities to self-identify issues, correct the same, and maintain confidentiality over what was found and how the same, was dealt with.

The key point in this decision is that providers can shield this information from plaintiff’s attorneys and authorities in any civil, criminal, or administrative proceeding. For SNFs, bombarded with litigation and in some cases, arising out of survey activity, this is great news, at least in New Jersey. I suspect, industry trade associations and legal representatives will analyze this case for broader applicability in other states and venues. A good synopsis is located here:

The second case involves a decision from the Supreme Court, also potentially favorable to providers.  The case involves claims made under the False Claims Act.  Recall, the False Claims Act makes billing the federal government (submitting claims) falsely with knowledge or intent, a crime.  False Claims Act violations in health care typically involve “whistleblowers” claiming inside knowledge of fraudulent billing practices whereby, Medicare is billed for care not rendered, care that should have been billed at a lower level, substandard care that is being reimbursed, etc.  Back in 2016 I wrote a post that covered a then, Supreme Court ruling involving the False Claims Act.  The post provides detail on how the False Claims Act typically applies in health care cases.  That post is here:

This case is unrelated with the exception that it too, deals with the False Claims Act.  In this case, the court set a lower standard for dismissal of a False Claims Act case, even if the whistleblower objects.  The court basically said, if the government attorneys, typically at the state level, decide a case does not have merit, they can dismiss the case even if the whistleblower wishes to continue to pursue litigation.

Whistleblower cases or Qui Tam cases as they are commonly known, begin as a private action on behalf of one or more individuals or entities believing, that they have evidence of false claims.  If in fact the case does pass muster and becomes a part of state or Department of Justice activity against the entity that committed the violation, the whistleblower stands to reap significant financial reward, triple the damages/financial impact.  The cases are expensive and lengthy and often, per government officials, most cases don’t pass muster for federal support/litigation.  It is up to the government to decide if it wishes to pursue the case on behalf of the whistleblower or not.

Effectively, the court said that the government has no duty to take these cases on and in fact, can intervene at any time and have the case dismissed.  The government does not have to take on the case to have it dismissed.  The government can if it chooses, allow the whistleblower to pursue the case for any length of time and when it so chooses, accept the case or dismiss it without prior notice or involvement.

What the decision does is throw a big wrench into the Qui Tam legal industry and create a note of caution for attorneys and whistleblowers alike.  Qui Tams are expensive and typically, involve a legal firm bankrolling the process until the government accepts the case.  The expansive rewards at conclusion include significant reimbursements of legal fees on behalf of the whistleblower. False Claims actions blew up post a 1986 Congressional action establishing the right of individuals and entities to sue.  

For providers, especially SNFs and hospices, this case is good news.  Qui Tam cases have heavily targeted providers in these industries and with the Court’s decision, the bar for a Qui Tam action has been raised.  Really solid cases will proceed but cases that may have questionable merit and facts, are likely to not catch the attention of law firms/lawyers that have historically, pursued Quit Tam actions.  The costs of doing so are simply too high to take on a case that could be dismissed at any time by the government, even over the objection of the whistleblower.  

For anyone interested, the opinion is available here: Polansky v. Executive Health Resources Inc.

TGIF and enjoy this upcoming, summer weekend!


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