U.S. ex rel. Parikh v. Citizens Med. Ctr. (Summary)

FALSE CLAIMS ACT/QUI TAM

U.S. ex rel. Parikh v. Citizens Med. Ctr., No. 6:10-CV-64 (S.D. Tex. Sept. 20, 2013)

Three cardiologists brought a qui tam suit against a county hospital and individuals for violations of the False Claims Act.  The cardiologists alleged that the hospital had, among other things, run a kickback scheme in which it paid bonuses and financial incentives to physicians who referred patients for treatment at the hospital and for providing unnecessary medical services. The U.S. District Court for the Southern District of Texas denied the hospital’s motion to dismiss allegations concerning (i) violations among certain physician groups of the hospital, (ii) violations for providing unnecessary medical services, and (iii) conspiring to violate the False Claims Act.

Three cardiologists who were formerly employed by the hospital contended, among other things, that the hospital (i) implemented bonus and fee-sharing programs for emergency room physicians who referred patients for cardiology treatment at the hospital, and (ii) employed cardiologists at above-market salaries and provided them discounted office space so long as they referred patients to one exclusive cardiac surgeon.  The court ruled that the allegations of a pervasive referral and kickback scheme that allowed emergency room physicians to receive bonus payments were sufficiently detailed and plead to survive the hospital’s motion to dismiss.  Similar alleged arrangements with gastroenterologists, the Lithotripsy Group, and urologists also survived the motion to dismiss.  The court found that sufficient details were also given and plead concerning medically unnecessary treatment to reject the hospital’s motion to dismiss in this area.  The Court dismissed claims pertaining to the hospital’s alleged violation of Medicare Conditions of Participation.

** Subsequent Opinion **

U.S. ex rel. Parikh v. Brown, No. 13-41988 (5th Cir. Aug. 11, 2014)

Initial Appellate Review, subsequently withdrawn and replaced by Order dated October 1, 2014.

** Additional District Court Opinions**

FALSE CLAIMS ACT

U.S. ex rel. Parikh v. Citizens Med. Ctr., Civil Action No. 6:10-CV-64 (S.D. Tex. Sept. 3, 2014)

The District Court for the Southern District of Texas struck a hospital’s affirmative defenses of ratification, waiver, and consent, finding that they were inapplicable in False Claims Act (“FCA”) cases. The court refused to strike language in the hospital’s answer that argued the United States had suffered no injury or damages. The relator’s motion to strike the “public disclosure bar” was denied. The court refused to strike the hospital’s affirmative defenses of compliance with Stark Law exceptions and anti-kickback safe harbors, finding that the invocation of specific statutory exemptions would be sufficient.

** Additional U.S. Court of Appeals Opinion **

U.S. ex rel. Parikh v. Brown, No. 13-41088 (5th Cir. Oct. 1, 2014)

The United States Court of Appeals for the Fifth Circuit granted a petition for a panel rehearing in this case.  It withdrew its prior opinion in the case and filed a new opinion, which also affirmed the district court’s ruling denying qualified immunity to an employed cardiologist and to an administrator of a county-owned hospital.