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Analysis

Intermountain Healthcare Asking Supreme Court to Review False Claims Case

By Steven Porter  
   November 19, 2018

The nonprofit health system notified a District Court judge in Utah that it would ask the Supreme Court to review a decision by the 10th Circuit Court of Appeals.

After an unfavorable ruling at the appellate level, Intermountain Healthcare isn't ready to submit to discovery requests in a False Claims Act (FCA) case that could carry major implications for the way courts assess federal payments based on doctors' subjective medical decisions.

The Salt Lake City–based nonprofit said in a court filing Thursday that it would ask the Supreme Court to review a 10th Circuit Court of Appeals decision that Intermountain attorneys previously described as "unprecedented."

It's too soon, of course, to know how the dispute will shake out; regardless, these proceedings could influence the ways hospitals and health systems guard their organizations against these often-expensive fraud cases. And if Intermountain ultimately loses, the outcome could further strain the relationship between executives and physicians by prompting risk-averse organizations to implement stricter controls.

The appellate decision was controversial from Intermountain's perspective for two main reasons: First, it allowed the allegations brought against two hospitals by a whistleblower to proceed without the same level of particularity typically required by the federal rules of civil procedure. Second, it meant that a physician's determination of medical necessity can be deemed objectively false under the law, even without an established government standard.

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The decision could enable more whistleblowers to reach at least the discovery stage of FCA litigation, Jason Mehta, a partner at Bradley Arant Boult Cummings LLP in Tampa Florida, told Bloomberg Law when the appellate decision was issued last July.

"For providers, this is somewhat of an ominous development," Mehta said.

Intermountain said on Thursday that it will, no later than January 14, petition the Supreme Court to address each of the two points of contention, perhaps with additional questions. In the meantime, it has asked that further proceedings at the District Court level in Utah be put on hold.

Beware the Internal Crackdown
 

This case directly implicates the sensitive relationship between hospitals as institutions and their self-governing medical staffs, says Douglas A. Grimm, JD, MHA, FACHE, a healthcare regulatory lawyer with Arent Fox in Washington, D.C., who worked previously as a hospital administrator.

Hospitals want to deliver care to as many patients as possible to serve their communities and fulfill their missions, while ensuring that they're providing high-quality care and abiding by the law, Grimm says

"But they also have to be careful," Grimm tells HealthLeaders. "If they're second-guessing everything that their medical staff does out of a legitimate concern about False Claims Act liability, that relationship between the medical staff and the hospital is going to be fundamentally altered."

The defendants—including HCA's St. Mark's Hospital; Intermountain Healthcare; Intermountain Medical Center; Sherman Sorensen, MD; and Sorenson Cardiovascular Group—initially prevailed at the District Court level. The judge ruled last year that a physician's opinion about medical necessity cannot be objectively false under the FCA without a binding government standard. The judge ruled also that the whistleblower who brought the case in 2012, Gerald Polukoff, MD, had failed to plead his case against Intermountain with sufficient particularity.

But the 10th Circuit reversed that ruling earlier this year and sent the matter back to the District Court for further proceedings, finding that a doctor's opinion on medical necessity could be false and that Polukoff was not required to be more specific in his pleadings because Intermountain was the only entity with possession of the relevant information.

What It Means, Where It's Headed
 

The appellate decision means hospitals in Intermountain's position could be forced to mount subjective defenses of their doctors' subjective medical determinations to ward off allegations of fraud, Grimm says.

"You're now faced with a battle of the experts—which is one thing in a medical malpractice case, but it's entirely another thing when you're dealing with federal False Claims Act cases," he says.

"I think the False Claims Act is relatively broad as it is," he adds, "but this would continue to move it forward and open the aperture."

Polukoff asked the District Court to reject Intermountain's request for a stay and instead allow him to move forward with discovery.

"Intermountain's motion implicitly invites this Court not to follow the law of the case." Polukoff's attorneys wrote in a filing Friday. "The Court must decline this invitation and apply the law of the case regarding a stay to this subsequent stage of the proceeding."

Intermountain to Seek Writ SCOTUS by HLMedit on Scribd

—Steven Porter is an associate content manager and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The appellate court's decision could enable more whistleblowers to make it to the discovery stage in False Claims Act litigation. That could put a strain on healthcare providers.

Hospitals and health systems could be increasingly put in the position of defending doctors' subjective judgments related to medical necessity.


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