Court Poised to Rule on Motions to Dismiss Key Whistleblower Case

Decision expected soon in the Providence lawsuit.

As regular Monitor Monday listeners know, we have been closely tracking the progress of data analysis firm Integra Med Analytics’ whistleblower lawsuit against Providence Health and its consultant J.A. Thomas and Associates, Inc. (JATA), alleging a conspiracy between Providence and JATA to upcode for major complications or comorbidities (MCCs). Although the federal government declined to join the case in August 2018, Integra Med Analytics has continued to proceed on the government’s behalf, as is its right. 

This case is being closely watched by healthcare industry experts because it is reflective of a growing trend of data analysis firms-turned-whistleblowers reviewing the mountains of Medicare claims data the Centers for Medicare & Medicaid Services (CMS) has made publicly available and launching whistleblower cases when they find patterns in the data that are indicative of fraud. These firms seek to develop independent, non-public information confirming that the patterns were a product of fraud and cannot be explained away by a competing, innocent explanation. 

In this case, Integra alleges that it analyzed seven years’ worth of CMS claims data (from 2011 to 2017) for a subset of Providence hospitals that used JATA as a consultant and found that those hospitals were statistically more likely than other hospitals to add to a hospital claim three secondary diagnoses/MCCs  in particular – encephalopathy, respiratory failure, and malnutrition – that can increase a hospital’s Medicare payments by $1,000 to $25,000 per claim. According to its complaint, Integra conducted what it describes as an exhaustive, multi-faceted investigation, whereby it interviewed former employees of Providence and JATA and reviewed their marketing materials in a bid to show that Providence’s alleged false claims were not only intentional, but part of a systematic effort to boost Medicare revenue. Integra’s complaint is replete with references to internal documents allegedly containing examples of JATA coaching and steering Providence doctors to upcode for CCs and MCCs.

Last week, federal judge Philip Gutierrez heard oral argument from the parties on Providence Health’s and JATA’s motions to dismiss the case. The defendants’ primary argument is that Integra’s lawsuit is precluded by the False Claims Act’s public disclosure bar, which seeks to prevent parasitic whistleblowers that simply read about a fraud scheme in the press from filing a case and sharing in the government’s recovery. The public disclosure bar allows the judge to dismiss a whistleblower case if it is based on information already in the public domain, unless the whistleblower is the original source of the information. 

According to the defendants’ argument, by relying on Medicare claims data, and given the prevalence of public U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) reports regarding the incorrect coding of particular MCCs for conditions such as Kwashiorkor, Integra has simply repurposed publicly available information to file its complaint, and it should be dismissed. In response, Integra argues that it has supplied ample non-public information in the form of internal JATA documents and statements from former JATA employees demonstrating that the alleged upcoding was part of an intentional effort to improperly boost Medicare reimbursement. After hearing the parties’ arguments, the judge did not issue a ruling, but instead took the matter under submission.

The next day, Judge Gutierrez issued an order asking the parties to provide supplemental briefs on two issues arising from the oral arguments, and in so doing he has given us a good sense of where he may be leaning in terms of his ultimate decision. In his supplemental order, Judge Gutierrez noted that he was not convinced by defendants’ argument that all information generally available online can constitute “news media” that has been publicly disclosed. In an era in which most traditional print journalism has moved online to join the growing proliferation of news websites of unknown origins, including corporate outlets masquerading as objective journalism and a vast array of social media platforms on which individuals and organizations can self-publish, it can be difficult to determine where to draw the line between legitimate news media (of which the government can be expected to have taken notice) and information that can be relegated to the general background noise of the Internet. Judge Gutierrez, who is clearly grappling with this question, has sought additional briefing from the parties on how to create a workable standard. 

Specifically, Judge Gutierrez has asked the parties to “address the level of generality at which the Court should look at these (online) sources; for example, should it decide whether YouTube as a whole is a news media source, or should it instead look at the individual YouTube account at issue? Finally, for each piece of information about JATA’s business practices that Defendants argue has been publicly disclosed, the parties should address why it has or has not been publicly disclosed from the news media under the standard they propose.”

The resolution of this matter now appears to hinge on how the judge answers this precise question. For instance, if the YouTube channels and online chat rooms at issue are considered news media, Integra’s allegations will have been publicly disclosed and its complaint will be dismissed (unless the court determines Integra is an original source of this information, which is unlikely). Alternatively, if the YouTube channels and online chat rooms at issue are not considered news media, Integra’s complaint is expected to stand. 

We will be watching out for the parties’ supplemental briefs, which are due to be filed on March 8. Once the briefs are in, we expect the judge’s ruling to follow in the ensuing weeks, perhaps even as early as the end of March.