Home Health & Hospice Week

Qui tam cases on the rise, experts warn.

A whistleblower lawsuit attacking your home care organization may not come from where you'd expect.

Case in point: A billing company employee filed a qui tam suit against Apria Healthcare Inc. earlier this year. Xandra Jarl, an employee of Chicago-land Billing Center in Machesney Park, IL, accused Apria of submitting false claims.

Jarl alleged that Apria billed Medicare, Medicaid and other insurance companies without obtaining assignment of benefits forms properly signed by patients. After repeatedly informing Apria employees of the billing problems, and subsequently being demoted and quitting her job, Jarl filed suit.

Jarl accused Apria's St. Louis operation of manipulating the computerized billing system, making it appear Apria had obtained the AOB forms when it hadn't. Jarl says she knows of 65 specific instances of such improper billing, and believes there were "hundreds, if not thousands more instances" of it, according to a U.S. District Court for the Northern District of Illinois opinion issued Sept. 13.

But the federal court shoots down Jarl's suit, saying she didn't have enough specifics to make the False Claims Act charges stick. Jarl failed to specify which Apria employees engaged in fraud, when the fraud occurred and on which specific claims, Judge Philip Reinhard notes in the dismissal. She even fails to say why the "improper billings" constituted fraud.

Whistleblowers See Providers as Cash Cows

"There is no doubt that the number of whistleblower cases is increasing," warns Burtonsville, MD-based health care attorney Elizabeth Hogue.

"We are seeing more and more qui tam situations," reports attorney Liz Pearson with Covington, KY-based Pearson & Bernard.

Attorney Ron Clark with Arent Fox in Washington, DC worked for the Department of Justice as senior trial counsel, supervising qui tam lawsuits from the mid 1980s to 1995. Back then, the "general rule of thumb is that the number of cases doubled every year," he relates, and that figure hasn't changed much. By the end, "I was afraid to see the mailman walk down the hallway" because of the number of cases pouring in, Clark quips.

Whistleblower suits are so popular because they can be very profitable for the qui tam relators - and the attorneys who represent them, Pearson notes. "There's just so much money to be made if you're a successful relator," Clark agrees.

Once whistleblower cases started reeling in hundreds of millions of dollars, law firms started aggressively soliciting potential qui tam relators by placing ads in medical professional magazines and other venues, Clark notes.

And regulators love these suits "because they potentially make their jobs so much easier," Hogue says.

Are You a Prime Target?

Health care providers have made juicy targets because they are usually quite willing to settle rather than embark on a staggeringly expensive court battle, Pearson notes. Securing even a preliminary dismissal, like in the Apria case, requires significant resource expenditures, Hogue points out.

And ironically, home care providers can be susceptible to whistleblower suits because of their compliance efforts. "Those suppliers, like Apria, that are fully committed to compliance sensitize employees to regulatory and compliance issues," says John Wester, Apria counsel in the case. Once providers focus employees on compliance issues, some employees tend to assume "any variation, however slight or infrequent, from a provider's 'best practices' automatically gives rise to a False Claims Act case," says Wester, with Sidley Austin Brown & Wood in Washington, DC.

Providers can take heart from the fact that whist-leblowers still have to meet standards of proof, as shown in the Apria dismissal, Hogue notes. When fraud is alleged, Federal Rule of Civil Procedure 9B requires plaintiffs to state their allegations "with particularity," Clark explains. The idea is to keep plaintiffs from slandering providers or blackmailing them with bogus lawsuits.

But how specific whistleblowers have to get is really up to the individual judge who hears the case, says Clark, who now defends providers against qui tam lawsuits. "Each judge has their own specific standards," Clark tells Eli.

A dismissal for failing to be specific enough doesn't mean the nightmare is over for a provider, however. Usually the judge allows the whistleblower to file an amended complaint, Clark explains.

In Apria's case, Jarl has 21 days from the order to file an amendment, Wester notes. "It may come back," he acknowledges.

Chances of a successful qui tam case are slimmer, though, if the government declines to get involved - as it did in this Apria case. The government has a window of opportunity to look over the case while it is still under seal. "Where the government doesn't intervene, there is much more of chance that the case will fail," Pearson says.

Clark estimates more than 90 percent of cases where the government doesn't intervene fail. When the government fails to get involved, the full work and expense of the case falls to the relator. And the government generally won't share information such as HHS Office of Inspector investigations and Federal Bureau of Investigations inquiries, Clark points out.

Most whistleblower attorneys have a clause in the contract that says if the government doesn't intervene, the whistleblower must switch from a contingency fee basis to paying for the attorney's work straightforwardly, Clark observes. Most relators then give up.

Not so fast: Providers shouldn't celebrate too quickly if the government passes on a case, however. Because of the significant financial rewards, qui tam attorneys may decide to fund a case if they feel it has a good chance of success even without the government's help, Clark says.