Medicare Compliance & Reimbursement

Whistleblowers can’t sic the False Claims Act on Medicare contractors simply for approving payments that a health care provider submitted fraudulently.

So ruled the 11th U.S. Circuit Court of Appeals in the Jan. 28 decision U.S. ex rel Saralosa v. Aetna (No. 01-14291).

The feds had put players involved in a scam perpetrated by now-defunct Florida home health agency St. Johns HHA through the wringer, including numerous trials starting in 1999. But two former St. Johns employees have been trying to put fiscal intermediary Aetna Life Insurance Co. on the hook for FCA penalties as well.

They argued that Aetna was guilty of “aiding and abetting” St. Johns’ FCA violations by paying out on the agency’s false claims.

When a district court knocked down that argument because Medicare contractors generally are immune from FCA liability, the qui tam relators switched tactics. They argued that Aetna failed to perform its auditing obligations sufficiently, letting St. Johns’ claims slip through the cracks and get paid. However, the former St. Johns employees offered no specifics on how that happened.

In theory, if an FI did fail in its auditing and other obligations, it could be liable under the FCA, the appellate panel ruled. But since the whistleblowers offer no specific proof of such failings, Aetna retains its immunity from FCA liability in this case. St. Johns was accused of submitting claims for services it never delivered, among other alleged violations. The case will return to the district court for a final decision.

To see the ruling, go to http://law.emory.edu/11circuit/jan2003/01-14291.opn.html.