A federal court in Ohio issued an opinion this summer that illustrates the very broad scope of the “whistleblower” protection under the federal False Claims Act (FCA). The opinion is a warning to professional practices that employ someone who is, or threatens to become, a whistleblower and to hospitals where the employee practices.

Facts

The Ohio case was filed by a nephrologist who was an employee and shareholder of a large multi-specialty medical practice (the Clinic) and who practiced at an area hospital (the Hospital). The plaintiffnephrologist served on the Hospital’s peer review/quality improvement committee and on the Clinic’s risk management committee. During the time the plaintiff was employed by the Clinic, the Clinic also hired a cardiothoracic surgeon who was granted surgery privileges by the Hospital on the condition that the surgeon’s first 50 operations be supervised by another physician. The plaintiffnephrologist was asked by the president of the Hospital’s medical staff to investigate a case in which one of the cardiothoracic surgeon’s patients died at the Hospital following surgery. The plaintiff concluded that the surgeon had performed the case without the required supervision and that the surgeon’s gross negligence caused the patient’s death. For approximately two years, the plaintiff complained to the Hospital, the medical staff and Clinic leaders that the cardiothoracic surgeon was performing procedures at the Hospital for which the surgeon was not trained and/or did not hold privileges. The plaintiff alleged that the surgeon also warned the Clinic and the Hospital that it was “fraud” to bill Medicare for surgeries performed by an unqualified physician, and that he would inform the Joint Commission and police regarding the billing issues. The plaintiff contacted CMS and the state medical licensing board regarding his concerns.

The plaintiff claimed that the Clinic and Hospital responded to his allegations regarding the cardiothoracic surgeon by retaliating against him, including removing him from Hospital and Clinic committees and placing him on three separate leaves of absence from his Clinic employment. During the leaves of absence, the plaintiff’s Hospital privileges were suspended because he was without malpractice insurance, and he was required to undergo extensive psychiatric and psychological evaluation and counseling, including for anger management problem. The plaintiff alleged that the defendants “fabricated” and communicated to the Clinic’s shareholders and to other potential employers that he was disruptive and was verbally abusive of patients. Ultimately, the Clinic shareholders voted to terminate the plaintiff’s employment at the Clinic.

Plaintiff’sWhistleblower Claim

The plaintiff brought a lawsuit under multiple theories against the Hospital, the Clinic, and individual leaders of both organizations. Interestingly, one of the plaintiff’s claims was that he was unlawfully discriminated against in connection with his employment in retaliation for his actions “in furtherance of” the FCA. The federal court dismissed this FCA whistleblower claim against the individual physician defendants because none of them was the plaintiff’s employer. However, the court refused to dismiss the FCA whistleblower claim against the Hospital and the Clinic. Here are the highlights of the court’s opinion:

  • Although the Hospital was not a W-2 employer of the plaintiff, the plaintiff made credible allegations that the Hospital exercised sufficient control over his practice, such that the court could reasonably infer an employment relationship with the Hospital.
  • The court noted that there was no evidence that the FCA was violated by the Hospital billing Medicare for services performed by an unqualified physician. The court even cited a 2006 decision in which another federal court dismissed an FCA whistleblower suit that alleged that Yale University had billed Medicare for studies interpreted by unqualified radiologists, concluding that the Medicare regulations did not provide a basis for distinguishing between “qualified” and “non-qualified” physicians. Nevertheless, the court in this case held that an employee is entitled to protection under the whistleblower provision of the FCA if he is discriminated against because he is contemplating a whistleblower (a/k/a qui tam) action under the FCA, even if the claim which the employee is contemplating ultimately would not be successful and/or is not filed.
  • This opinion was reached in the context of a request by the defendants to dismiss the plaintiff’s claims. The opinion does not mean that the plaintiff will ultimately be successful in recovering damages from the defendants, but does mean that the expense of litigation will continue.

Practical Consequences

What is the practical lesson of this opinion for healthcare employers and hospitals? It is that, if an employee or medical staff member contends that a practice or hospital has wrongfully billed a thirdparty payor, the practice or hospital should consult with counsel before taking disciplinary action against the individual. Counsel can assist the practice or hospital to analyze whether the individual is entitled to protection under federal or state whistleblower statute and, if not, to structure and document the disciplinary action in a manner that reduces the risk the individual could successfully claim protection under those statutes. Remember, even if the “whistleblower” is wrong and the practice’s or hospital’s actions do not constitute billing fraud, whistleblower protections may apply.