The number of far-reaching and burdensome False Claims Act (FCA) decisions increases by the day.  In an August 14, 2015 order by the U.S. District Court for the Middle District of Florida, a whistleblower’s complaint survived a motion to dismiss based upon some rather attenuated allegations.  Since this matter was decided at the pleadings stage, the facts may ultimately dictate a different outcome; nevertheless, the cost and burden of defending the case may result in a costly settlement precipitated by this decision.

In the case, U.S. ex rel. Bingham v. BayCare Health System, the claim is that BayCare’s construction of medical office buildings, common areas, walkways and garages on the campus of a BayCare hospital (St. Anthony’s Hospital), provided a benefit to referring physicians sufficient to constitute prohibited remuneration under the Stark law.  The medical office building was constructed by an entity called “St. Pete MOB, LLC”, which is not described as having ownership by referring physicians.   Although the facts are not clear, it appears that the allegedly improper benefit to physicians took the form of BayCare providing a “non-exclusive parking easement” to St. Pete MOB. 

Although the opinion does not point to physician ownership of St. Pete MOB as a key fact, the court credits the allegation that the easement, which evidently permitted access to St. Anthony’s existing garage, permitted St. Pete MOB to avoid the expense of building its own garage, with these savings passed along to physicians, staff and patients in the form of free parking.  Although the easement “was not signed by any of the referring physicians who benefit from it,” the court deemed this a sufficient allegation of indirect remuneration to survive a motion to dismiss.

Similarly, the complaint asserts that BayCare provides a rent concession to the referring physicians using the office building by claiming a tax exemption for what is alleged to be non-exempt property, which saved the MOB about $140,000 in real property taxes, which subsequently resulted in lower rent to the referring physicians who rented space in the building.

Based on these alleged Stark violations, the whistleblower deemed every claim filed based on patients of referring physicians who rented space in the MOB (or parked in the parking garage?) and collected data from CMS regarding the dollar value of Medicare reimbursements received by the hospital resulting from procedures or admissions of the “tainted” physicians during the relevant time period.  The court found this set of allegations to have “sufficient indicia of reliability” to survive a motion to dismiss.

Another unique feature here is that the whistleblower had no relationship with BayCare or St. Anthony’s, but rather was a commercial real estate appraiser who “employed his skills and experience” in uncovering this arrangement.

Perhaps additional facts before the court but not described in the opinion provide a greater justification for what appears to be a rather far-fetched theory of FCA liability.  The case is a cautionary tale, nevertheless, of how careful healthcare providers must be to avoid being swept up into costly litigation with the onerous penalties of the False Claims Act.