Integra Med Analytics Loses Battle to Establish New Breed of Corporate Whistleblower Outsiders

Late last week, Integra Med Analytics, a corporate whistleblower that has filed several lawsuits alleging healthcare fraud, was dealt its latest blow when the Fifth Circuit Court of Appeals declined to revive its whistleblower lawsuit against Baylor Scott & White, a hospital chain in Texas.

Integra Med Analytics filed its whistleblower lawsuit under the False Claims Act (FCA), a law that allows private parties (known as qui tam relators or whistleblowers) to sue those defrauding the government and receive as a reward a share generally ranging from 15 to 30 percent of the government’s total recovery. Whistleblowers who file suit under the FCA are often insiders, or former insiders, who were at the proverbial scene of the crime and have first-hand knowledge of wrongdoing by their current or former employers.

But Integra Med Analytics is different; its whistleblower lawsuits are primarily based on analysis of publicly available healthcare data, writing algorithms to scan for patterns that, according to the company, are indicative of Medicare fraud.  Instead of the archetypal whistleblower insider, Integra Med Analytics is part of a new breed of whistleblower, one who rather than being at the scene of the crime instead figures it out afterwards, using specialist training to stitch together pieces of publicly available data and sniff out potential wrongdoing, much like a whistleblower sleuth whose vantage point is that of the outsider looking in.   

The specific allegations in most of Integra Med Analytics’ whistleblower lawsuits involve defrauding the Medicare program by overcharging for certain hospital visits. Hospitals are generally paid based on which diagnosis related group (DRG) they either treated, in the case of an illness, or performed, in the case of a surgery. DRG payment amounts are modified by whether a patient has any comorbidities or complications. Put simply, removing an appendix from a person who has been diagnosed with diabetes will generally yield a higher reimbursement amount than removing an appendix from a non-diabetic.

Integra Med Analytics used their data analytics specialty purportedly to analyze publicly available hospital discharge data to identify suspicious patterns of comorbidity diagnoses. Their analyses identified several hospitals, including Baylor Scott & White in Texas, with abnormally high rates of encephalopathy, respiratory failure, and severe malnutrition being applied to its DRGs.

Integra Med Analytics then used this information (and in some instances supplemented it with more of the classic insider-type information it gained from private investigators) to file FCA whistleblower lawsuits against several hospital chains that fell into this pattern. Last summer, two of Integra’s whistleblower lawsuits, proceeding in parallel in separate federal courts, produced critically divergent results. A court in California, in a suit against Providence Health System, found that Integra Med Analytics alleged a legitimate legal theory with sufficient particularity for its suit to move forward. A court in Texas, in the lawsuit against Baylor, Scott & White, however, came to the opposite conclusion. The Texas court also found that Integra’s lawsuit violated a provision of the FCA called “the public disclosure bar” which states that a whistleblower lawsuit cannot be based on information that is broadly, publicly available and that takes no specialized expertise to interpret.

Both decisions were quickly appealed, and the Texas case has now been decided. Late last week, a three- judge panel of the Fifth Circuit Court of Appeals reached a unanimous decision not to revive Integra’s case against Baylor, Scott & White, leaving last year’s Texas district court decision in place. In reaching its decision, the panel pointed to Integra’s own legal filings, which demonstrated that non-Baylor hospitals were also following similar coding patterns, albeit later. The judges then surmised that Baylor was simply on the leading edge of this pattern, and that was not evidence of fraud.

The California case against Providence Health System continues and awaits a decision by the Ninth Circuit Court of Appeals, while several other cases filed by Integra Med Analytics are in earlier stages of litigation and are wending their way through various district courts throughout the U.S.

We will continue to monitor these cases, which are on the leading edge of False Claims Act litigation, and be sure to keep RACmonitor readers apprised of developments as the courts decide whether this new breed of whistleblower specialist sleuths, outsiders looking in, are allowed to survive and stand shoulder to shoulder with the archetypal whistleblower insider. 

Programming Note: Listen to Mary Inman report this story live from London during Monitor Mondays, June 8, 10-10:30 a.m. EST.