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From Health Law Daily, March 18, 2015

Relator’s receipt of a death threat foreshadowed the demise of case

By Kayla R. Bryant, J.D.

A relator bringing a False Claims Act (FCA) (31 U.S.C. §3729(a)) case against a hospital system related to services provided to Medicaid patients did not allege any conduct that was actionable under the FCA. The U.S. District Court for the District of Minnesota dismissed the entire complaint filed by Paul Olson, who served as manager of payment policy and rates management for the Minnesota Department of Human Services (DHS), against Fairview Health Services of Minnesota (Fairview). Fairview owns and operates several hospitals throughout the state (Olson v. Fairview Health Services of Minnesota, March 16, 2015, Davis, M.).

Facts. In Minnesota, Medicaid claims are submitted to DHS via a uniform billing claim form, which includes the top price the hospital might receive for rendering similar services to a non-Medicaid patient. This price is considerably higher than the predetermined reimbursement rates that hospitals receive for Medicaid patients. The already low Medicaid reimbursement rate was decreased by 10 percent due to an amendment to Minnesota Statute section 256.969, enacted by Governor Dayton in 2011 as a way to decrease government expenditures. The amendment contained an exclusion section providing that some children’s hospitals would not be subject to the reimbursement reduction.

Amendment language. Olson claims that he drafted the 2011 amendment language in his capacity at DHS, and that the exclusion was to allow three well-known children’s hospitals to escape the reduction since they relied disproportionately on revenue from Medicaid reimbursements. The term “children’s hospital” is not defined by statute, but Olson claims he relied on a federal definition of “a hospital with patients that are under 18 years of age.” The three hospitals included in the exclusion and their Medicaid admission rates were Minneapolis Children’s Hospital, 65 percent; St. Paul Children’s Hospital, 48 percent; and Gillette Children’s Specialty Healthcare, 45 percent. The exclusion did not apply to the University of Minnesota Medical Center, Fairview (UMMC), formerly known as Fairview University Medical Center (FUMC). The University of Minnesota Children’s Hospital serves as the children’s unit at UMMC, formerly known as Amplatz Children’s Hospital (Amplatz). FUMC’s Medicaid admission rate was 27 percent.

FUMC’s request. During a meeting around November 2011, FUMC representatives discussed the possibility of Amplatz’s exemption from the rate reduction. Soon after, the Director of Purchasing & Service Delivery at DHS, Mark Hudson, asked Olson why Amplatz was not exempt from the reduction. Olson reasoned that classification as a children’s hospital requires a separate hospital license, whereas Amplatz was a “hospital within a hospital.” Olson was informed on October 12, 2012, that all FUMC patients under age 18 were to be excluded from the rate reduction. The exemption was applied retroactively, and a $500,000 reimbursement check was provided to FUMC.

Audit. Olson informed the DHS Commissioner about his concerns regarding Amplatz’s exemption, and an audit was conducted. The audit report concluded that DHS’ decision to give Amplatz retroactive exemption was inconsistent with the law, and recommended that DHS obtain a formal legal opinion on the matter. FUMC was notified that DHS was ending Amplatz’s exemption, and that DHS would calculate overpayment and issue a notice of recovery. Olson claims that following his reporting of the arrangement, he was retaliated against by being moved from an office to a cubicle and given the lowest performance rating at DHS, which was inconsistent with his previous positive ratings. He also received an anonymous death threat via telephone.

Claims. Olson’s initial qui tam complaint alleged violations of the FCA as well as violations of the Minnesota False Claims Act (Minn. Stat. section 15C.02). Both Minnesota and the United States declined intervention in the case. Two amendments of the complaint added allegations related to the audit report and fraudulent billings submitted by FUMC. Olson argues that FUMC engaged in misconduct that attempted to induce DHS officials to ignore state statute. He also argues that FUMC presented false claims to the government by making “improper oral requests and demands” (language found in the statutory definition of a claim under the FCA) from DHS regarding the exemption and that FUMC also violated the FCA when it submitted subsequent claims for Medicaid patients following the granting of the exemption.

Dismissal. The court found that FUMC did not engage in illegal action but merely “petitioned government for a favorable interpretation of unclear statutes” because the term “children’s hospital” is not defined by Minnesota statutes. The court also declined to see the subsequent claims as violating the FCA. The falsity element of the FCA requires that the statement or conduct at issue be a falsehood. The claims submitted following the granting of the exemption were not misrepresented. The court dismissed Olson’s complaint in its entirety and denied his motion to amend.

The case is Civil File No. 13-2607 (MJD/JJK).

Attorneys: Brian E Wojtalewicz (Wojtalewicz Law Firm, Ltd) for Paul Allen Olson. Ann M Bildtsen, United States Attorney's Office, for United States of America. Charles O Roehrdanz, Minnesota Attorney General's Office, for State of Minnesota. Andrew W Davis (Stinson Leonard Street LLP) for Fairview Health Services of Minnesota. Douglas R Peterson (Stinson Leonard) for University of Minnesota Medical Center, Fairview.

Companies: United States of America; State of Minnesota; Fairview Health Services of Minnesota; University of Minnesota Medical Center, Fairview; Fairview University Medical Center; University of Minnesota Children’s Hospital; Amplatz Children’s Hospital

MainStory: TopStory FCANews CMSNews MedicaidNews MedicaidPaymentNews EligibilityNews ProviderNews FraudNews

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