Maa v. Ostroff (Summary)

FALSE CLAIMS – QUI TAM

Maa v. Ostroff, No. 12-cv-00200-JCS (N.D. Cal. Apr. 19, 2013)

The United States District Court for the Northern District of California dismissed a qui tam action brought against a hospital’s “top employees” (including the CEO, President of the Medical Staff, CMO, Chair of Surgery, Dean of the School of Medicine, and Director of Risk Management) by a physician who alleged that inaccurate information was placed in his credentials file, his reappointment terms were limited to one year, and he was removed from tenure track – all in retaliation for raising concerns that a patient died because of another physician’s failure to appropriately supervise sedation nurses who were administering anesthesia, in violation of Medicare reimbursement regulations.

In his qui tam action, the physician alleged three types of false claims:  (1) the unsupervised and inappropriate use of sedation nurses to administer deep sedation; (2) the unsupervised use of residents to perform endoscopic procedures; and (3) the performance of medically unnecessary endoscopic procedures.

The “top employee” defendants filed a motion to dismiss the physician’s claims, arguing that the physician failed to state a claim for which relief is available under the law, since the allegations of improper use of sedation nurses are based on alleged violations of the Conditions of Participation for Hospitals (“COPs”) and the Ninth Circuit has already held that violations of COPs are not actionable under the False Claims Act.  Further, the “top employees” argued that they were entitled to qualified immunity, that the physician failed to satisfy the rules requiring fraud claims to be pled with particularity, that the physician’s state law claims were inappropriate since the statute cited by the physician in support of those claims did not apply to private insurance claims, and that the physician’s alleged “protected speech” was not actually protected by the First Amendment since it was made in the scope of his official job duties (as Vice Chair of the Department of Surgery Quality Improvement Program).

The district court held that payment by Medicare for anesthesia services is not conditioned on compliance with the COPs (42 C.F.R. §482.52) governing anesthesia administration and supervision, except if unqualified individuals performed the anesthesia services which are billed.  Accordingly, the court dismissed the physician’s claims based on the failure to comply with the Hospital COPs.

The district court also dismissed the physician’s claim that the residents were performing procedures without supervision, in violation of Medicare’s physician fee schedule regulations. The court rejected the physician’s claim that it was impossible for the supervising physician to be present for all of the procedures he scheduled due to the sheer number of procedures occurring simultaneously, noting that the regulations only required the supervising physician to be present for the “entire viewing” of endoscopic procedures and if all procedures took the minimal amount of time, the supervising physician could have been available to supervise all of the residents or to perform the procedures himself.

The district court also dismissed the physician’s claims regarding unnecessary procedures, noting that it is not sufficient for the physician to allege that a number of patients had many procedures within a short period of time, without otherwise alleging why those procedures would have been unnecessary.

Finally, the court also rejected the physician’s claims of retaliation in violation of his First Amendment rights to free speech, but gave leave for him to amend his complaint.  The court noted that whether the physician’s follow-up on the patient’s death (by internally raising concerns that the true cause of death had not been adequately identified and addressed and by planning to provide testimony in support of the patient’s family in a malpractice suit) was part of his official job duties or were personal speech was a question of fact that could not be decided by the court.  However, the physician’s complaint needed to be amended to allege the aspects of his speech that were personal.  Further, the court noted that the physician failed to specify how each of the “top employee” defendants was involved in the retaliation based on his free speech, a flaw that would need to be remedied in the amended complaint.