The Promise: Integra Medical Analytics Uses Data Mining to Stop Health Care Fraud
If Essence Group illustrates the threat from analytics-powered billing, Integra Medical Analytics LLC v. Providence Health and Services, highlights the potential of data to ferret out fraud. No. CV 17-1694 (C.D. Cal 2017). HHS-OIG has long used data-mining in compliance audits. Likewise, state integrity offices do so under Medicaid. However, whether these techniques are available to private whistleblowers suing under the False Claims Act, has been an open question.
The False Claims Act Public Disclosure Bar
Congress enacted the False Claims Act “public disclosure bar” to deter so-called “parasitic” lawsuits. Parasitic refers to cases based on widely-known public scandals or criminal and other civil prosecution. See, e.g. U.S. ex rel. Marcus v. Hess, 317 U.S. 537, 546 (1943) (holding that earlier version of FCA permitted relator to sue based on information in a criminal indictment); Claire Sylvia, False Claims Act, Fraud Against the Government, § 11:35 (identifying Marcus as impetus for public disclosure bar).
FCA practitioners have hotly debated whether a whistleblower may rely on analysis of public data, or whether it be barred.
Integra Identified Fraud By Analyzing Claims Data
Integra concerns this question. As with Essence Group, the defendant hired a data analytics firm to identify opportunities for increased billing. Here, the defendant hospital chain utilized J.A. Thomas and Associates, now a subsidiary of Nuance Communications Inc.
Under Medicare’s hospital payment system, payment rates reflect patient sickness. As in Essence Group, the whistleblower alleged that the defendant used data mining to increase billing, not improve patient care. But, the Integra, whistleblower based the allegation on analysis of claims data and information published on the internet.
Integra compared the defendant’s claims to those of other hospitals. And found enhanced severity codes appeared far more often. In some cases, nearly three times more often than at hospitals nationally.
Integra raised the question of whether analysis of public data was fair game for the FCA. The defendant asked the district court to dismiss the case. It argued that the complaint was based on information publicly disclosed by the CMS and on the internet.
The Integra Court Permits FCA Claims Based On Information on the Internet
In July, the court rejected that argument. Importantly for the future of these cases, the court acknowledged that the relator is not “a prototypical FCA relator in that it had no insider relationship with Defendants,” but found that fact “is not enough to bar its suit.” Integra Med Analytics, 2019 WL 3282619, at *5 (C.D. Cal. July 16, 2019).