According to documents filed in a Florida court on July 11, Halifax Hospital Medical Center and false claims relator Elin Baklid-Kunz have reached a $1 million settlement that will end a 5-year-old false claims case, provided the government approves the settlement agreement. The lawsuit did not specifically involve laboratory claims but because of its size, originally estimated at over $200 million, the allegations brought by the relator and the fact that the relator was Halifax’s compliance director, it has been closely followed by legal counsel and compliance professionals from many different segments of the health care industry. The settlement occurred one week before the July 8 trial was scheduled to begin. Background Originally, the case involved two separate issues. One involved alleged violations of the Stark and anti-kickback regulations concerning contracts with six medical oncologists and three neurosurgeons, which allegedly included improper incentives and above-fair-market payments. The second part involved the hospital admitting patients to the hospital when they could have been treated as outpatients allegedly because the hospital could receive a larger reimbursement. Part of the case rested on the relator’s allegation that there was no specific physician order for the admissions, making them improper and all claims related […]
According to documents filed in a Florida court on July 11, Halifax Hospital Medical Center and false claims relator Elin Baklid-Kunz have reached a $1 million settlement that will end a 5-year-old false claims case, provided the government approves the settlement agreement.
The lawsuit did not specifically involve laboratory claims but because of its size, originally estimated at over $200 million, the allegations brought by the relator and the fact that the relator was Halifax’s compliance director, it has been closely followed by legal counsel and compliance professionals from many different segments of the health care industry. The settlement occurred one week before the July 8 trial was scheduled to begin.
Background
Originally, the case involved two separate issues. One involved alleged violations of the Stark and anti-kickback regulations concerning contracts with six medical oncologists and three neurosurgeons, which allegedly included improper incentives and above-fair-market payments. The second part involved the hospital admitting patients to the hospital when they could have been treated as outpatients allegedly because the hospital could receive a larger reimbursement. Part of the case rested on the relator’s allegation that there was no specific physician order for the admissions, making them improper and all claims related to the admissions false claims.
The trial for the anti-kickback part of the case was scheduled for March 3 but was settled before the trial began when the hospital and government prosecutors reached an $85 million settlement.
The second part of the case involving the improper hospital admissions was the larger part in terms of the amount of damages involved and was scheduled for trial to begin on July 8. The government declined to intervene in this part of the case, but the relator chose to continue.
Halifax Seeks Summary Judgment
In an eleventh-hour attempt to get the case dismissed, Halifax filed a motion for summary judgment seeking a ruling on three issues. Halifax argued that the relator had not provided sufficient evidence as to the damages suffered by the government and questioned whether a violation of a condition of participation can render claims as false under the False Claims Act and whether some of the claims are barred by the statute of limitations.
Judge Gregory A. Presnell ruled in favor of Halifax on two of the three issues, which essentially dealt a crippling blow to the relator’s case. In terms of the damages, Presnell ruled that the relator had not established any evidence a jury could use to determine the amount of damages because she had claimed the entire amount charged for the services provided as an inpatient constituted the damages when the damages were actually the difference between what the government would have paid for the same services provided as outpatient rather than as inpatient.
Perhaps the more significant ruling involved Baklid-Kunz’s allegation that the admissions were improper because there was no documentation of a specific admission order present in the medical records. Halifax argued, and Presnell agreed, that even if the allegations are true, they constitute a violation of conditions of participation, not a condition of payment. A violation of a condition of participation does not make the claim false, and the court ruled that for the time being, the relator was barred from arguing or presenting evidence that the lack of an admission order alone was fraudulent.
The court ruled against Halifax on the statute of limitations issue, but the real damage was done. Halifax and Baklid-Kunz are waiting for the government to agree with the terms of the settlement, bringing an end to an important FCA case. It is possible that this case will be cited over and over again in the future for a variety of its rulings.
Takeaway: Every case can provide important information for compliance officers, even if they don’t involve their specialty. This case underscores the importance of adhering closely to all federal and state laws.
