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New False Claims Cases Press Patient Dumping Law Argument

Aug. 3, 2018, 8:18 PM

A law intended to stop hospitals from turning patients away from emergency departments based on their insurance status or ability to pay is now being used as a tool in False Claims Act litigation.

A pair of false claims cases in Mississippi allege a novel liability theory: the hospitals didn’t provide emergency medical assistance to uninsured and Medicare-eligible patients as required by the Emergency Medical Treatment and Labor Act (EMTALA) and then charged the federal or state government for the services.

Whistleblower attorneys, ever on the watch for new and inventive False Claims Act (FCA) liability theories, are closely watching the cases to see if they get traction. Likewise, attorneys defending health-care providers against such accusations are monitoring the cases for insights on how to defend against allegations that the government would not have paid claims by providers that failed to adequately screen or treat the emergency room patients.

“If the government knew that you were in violation of a regulation that you were required to comply with in order to participate in a program like Medicare, they wouldn’t allow you to participate. It’s that simple,” C. Victor Welsh III, a partner at Pittman Germany Roberts & Welsh LLP in Jackson, Miss., and one of the attorneys for the whistleblowers in both cases, told Bloomberg Law.

Emergency Care

Congress passed EMTALA in 1986 to require hospitals with emergency departments to screen every patient and then stabilize or transfer those requiring additional treatment regardless of their insurance status or ability to pay. The law was referred to as an “anti-dumping” law, that prevented hospitals from refusing to examine or transferring financially strapped patients to public hospitals without at least examining and stabilizing them.

A pair of whistleblowers in Mississippi have alleged that two different medical centers violated EMTALA, then submitted claims for services provided to those patients to the federal and state governments. The emergency injuries cited in the complaints ranged from fractures to partial amputations and gun shot wounds.

Dr. Blake Vanderlan, a surgeon and later trauma director for Merit Health Central Hospital (then known as Central Mississippi Medical Center) in Jackson, Miss., alleged the medical center wouldn’t provide emergency services necessary to patients and would transfer some patients to other facilities less adept to deal with the emergency condition in violation of EMTALA. These alleged incidences included trauma surgeons not examining patients and the transfer of patients who hadn’t been stabilized.

Candi Sibley, who worked at Delta Regional Medical Center, located in Greenville, Miss., alleged that Delta Regional violated EMTALA when doctors didn’t evaluate emergency room patients and improperly transferred unstable patients to other medical centers. A frequent allegation in the amended complaint was that the on-call surgeon would call in when paged, but wouldn’t come in person to evaluate the patient.

The two whistleblowers alleged the medical centers hid their noncompliance with EMTALA but nevertheless submitted claims for reimbursement from the Medicare and Medicaid programs.

Could It Work?

Both whistleblower and defense attorneys are watching to see if this theory will work. Welsh told Bloomberg Law he patterned his case on the Univ. Health Servs. Inc. v. United States ex rel. Escobar case, but said he has better facts than Escobar because the Centers for Medicare & Medicaid Services found Merit Health violated its emergency care obligations under EMTALA. In Escobar, the Supreme Court established that a misrepresentation could support an FCA claim if it would have affected the government’s payment decision.

Welsh said other lawyers have shown interest in this theory built on alleged EMTALA noncompliance but that none has sought him out to file a similar case.

“You try in these cases to be as black and white as possible. This is a lot of gray,” Joel Androphy, a partner at Berg & Androphy in Houston who works on whistleblower cases as part of his practice, told Bloomberg Law. “If this was an underserved area of Mississippi, would the government have paid it anyway despite the deficiencies? That will be a critical question going forward in the cases.”

The attorneys for Merit Health argued in their motion to dismiss that the case is nothing like Escobar, since Vanderlan didn’t allege a single Medicare or Medicaid reimbursement claim submitted by the hospital that was misleading due to the hospital’s failure to disclose the alleged EMTALA violations. They further argued that the alleged EMTALA violations fall short because they didn’t affect the government’s decision to pay the claims at issue.

Steep Climb Ahead?

George Breen, an attorney at Epstein Becker Green in Washington who represents health-care providers in false claims cases, echoed the defense team’s arguments, saying the Escobar decision seems to preclude the whistleblowers from using alleged EMTALA noncompliance for this purpose.

“There does not appear to be either an express or implied certification issue here,” Breen told Bloomberg Law. “Moveover, the FCA’s rigorous materiality standard, as noted in Escobar, cannot be satisfied as compliance with EMTALA was not material to address every potential regulatory violation.”

The attorneys for Delta Regional Medical Center argued that the HHS has set up a process to “address, sanction, and correct alleged EMTALA violations” that doesn’t include withholding payments for claims.

“There are existing administrative remedies and the FCA was never intended to serve as the mechanism to address every potential regulatory violation; at best, that’s what the relators seek to do here,” Breen told Bloomberg Law.

Welsh thinks no matter what the trial courts decide, there’s lots of litigation left. Whichever side loses is likely to appeal, so there is a good chance the cases will end up at the U.S. Supreme Court, he said.

The attorneys for Merit Health declined to comment on pending litigation. The attorneys for Delta Regional Medical Center didn’t return Bloomberg Law’s request for comment.

Vanderlan and Sibley are represented by C. Victor Welsh III of Pittman Germany Roberts & Welsh LLP in Jackson, Miss. and Lance Stevens of Stevens and Ward PA in Jackson Miss. Jackson HMA LLC is represented by J. William Manuel, Brad Robertson, and Jack Selden of Bradley Arant Boult Cummings LLP in Jackson, Miss., and Birmingham, Ala. Delta Regional Medical Center is represented by Frank Trapp, William Siler Jr., Jeffrey Moore, and Nicholas Morisani of Phelps Dunbar LLP in Jackson and Tupelo, Miss.

The cases are United States ex rel. Vanderlan v. Jackson HMA LLC, S.D. Miss., No. 15-767 and United States ex rel. Sibley v. Delta Regional Med.Ctr., S.D. Miss., No. 17-53.

To contact the reporters on this story: Matt Phifer in Washington at mphifer@bloomberglaw.com

To contact the editors responsible for this story: Peyton M. Sturges at psturges@bloomberglaw.com

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