Filing marks shift in nature of healthcare litigation of this nature.
The whistleblower cases I report on for RACmonitor typically are brought by the quintessential whistleblower – a healthcare industry insider who has observed first-hand fraud perpetrated by his or her employer and who, having brought the matter to the employer’s attention for redress and been rebuffed, participates in a False Claims Act (FCA) claim on the government’s behalf.
For instance, in May I reported on the federal government’s settlement of a False Claims Act case against Banner Health that was brought by whistleblower Cecilia Guardiola, Banner’s former corporate director of clinical documentation, for practices she uncovered in the course of her duties. The information a whistleblower insider like Ms. Guardiola provides is invaluable, precisely because it comes from the inside and can help prosecutors establish that, instead of resulting from an innocent mistake, the employer’s fraudulent practices were committed knowingly.
However, the recent lawsuit against Providence Health & Services (Providence) and its consultant J.A. Thomas and Associates LLC (JATA) is different. It is part of a new breed of whistleblower cases in which the whistleblower is an outsider – a third-party expert with subject matter knowledge in the field who is viewing the target defendant largely from the outside. Instead of an individual employee of defendants Providence or JATA, Integra Med Analytics LLC, the whistleblower here, is a data analysis firm that uses statistical analysis of publicly available data to attempt to uncover and prove fraud.
In this case, Integra alleges that it conducted an analysis of seven years’ worth of Centers for Medicare & Medicaid Services (CMS) claims data (from 2011 to 2017) for a subset of Providence hospitals using JATA as a consultant and found that those Providence hospitals were statistically more likely than other hospitals to add to a hospital claim three secondary diagnoses – encephalopathy, respiratory failure, and malnutrition – that can increase a hospital’s Medicare payments by $1,000 to $25,000 per claim.
It is notable that Integra does not rely exclusively on its outside evidence – that is, its statistical analyses of public data – to allege fraud against Providence and JATA. In its complaint, Integra acknowledges that it supplemented its analysis of CMS claims data (which uncovered a statistically significant pattern with the hallmarks of fraud) with more traditional, classic “inside” information and thereby confirmed its findings. According to its complaint, Integra conducted what it describes as an exhaustive, multi-faceted investigation whereby it interviewed former employees of Providence and JATA and reviewed their marketing materials to show Providence’s alleged false claims were not only intentional, but part of a systemic effort to boost Medicare revenue. Integra’s complaint is replete with references to internal documents, presumably provided by the former employee insiders Integra interviewed, allegedly containing examples of JATA coaching and steering Providence doctors to upcode for CCs (complications or comorbidities) and MCCs (major CCs).
To date, the press coverage has emphasized the more ground breaking part of Integra’s case – the fact Integra uncovered the alleged fraud via independent analysis of CMS data – while ignoring the fact that Integra supplemented this evidence with more traditional inside information gathered through a private investigation, which is the hallmark of most whistleblower cases. In this way, Integra is more of a hybrid outsider/insider whistleblower, or a case of “whistleblower outsider-plus” – the plus factor being an injection of information gained from the inside showing defendants’ purported knowledge of the practices to bolster the allegations otherwise arising from public records.
Since the federal government has declined to join Integra’s whistleblower case, Integra is invoking its right as a whistleblower under the False Claims Act to proceed with a declined case on the government’s behalf. We will continue to follow this case as it progresses. However, in the meantime, keep your eyes open for more False Claims Act cases from hybrid whistleblower insiders/outsiders, including Integra’s sister company, Integra REC LLC, which, according to the Providence complaint, also has served as a whistleblower and successfully initiated numerous FCA cases alleging fraud in mortgage-backed securities and other financial markets. Hybrid whistleblowers appear to be on the rise.