U.S. ex rel. Guardiola v. Renown Health (Summary)

FALSE CLAIMS/QUI TAM CASES

U.S. ex rel. Guardiola v. Renown Health, No. 3:12-cv-00295-LRH-VPC (D. Nev. Oct. 16, 2014)

The United States District Court for the District of Nevada upheld its own jurisdiction to hear a qui tam complaint against a hospital, in which the hospital’s former compliance director alleged billing fraud involving government-funded health insurance programs. In particular, the former director accused the hospital of submitting short-stay inpatient claims that actually should have been billed as outpatient claims.

The hospital sought to have the claims dismissed for lack of jurisdiction, arguing that the public disclosure bar, which requires a court to dismiss a qui tam complaint if it is based on allegations or transactions that have been previously disclosed to the public, applied because some of the billing fraud issues had been identified through RAC audits. The hospital also claimed that those billing fraud issues had already been disclosed to 585 physicians associated with the hospital and had therefore become public knowledge.

The court disagreed. It explained that these disclosures were not public because they were only made to physicians who were connected with the hospital. It specifically noted that these physicians had an economic incentive to protect the information from disclosure to outsiders. However, it also concluded that even if the disclosures were considered public, it would still have jurisdiction due to the “original source” exception. The original source exception permits the “original source” of the publicly disclosed information to bypass the public disclosure bar. Since the qui tam relator in this case had direct and independent knowledge of the hospital’s billing practices, the court reasoned that she was an original source and could continue to pursue her lawsuit against the hospital and denied the hospital’s motion to dismiss.