Defendants (Encompass Health Rehabilitation Hospital of Sarasota, LLC, HealthSouth Real Property Holdings, LLC, and HealthSouth Corporation)(collectively “HealthSouth”) operate a for-profit inpatient rehabilitation facility (“IRF”) in Sarasota, Florida.
The Plaintiff, Dr. Emese Simon, is a physiatrist who operated an outpatient medical practice through her wholly owned company, Florida Rehabilitation Associates, PLLC. Dr. Simon was also an attending physician with admitting privileges at HealthSouth Sarasota Hospital and had an independent contractor agreement with HealthSouth.
Dr. Simon filed this False Claims Act (“FCA”) on February 3, 2012 in the U.S. District Court for the Middle District of Florida. Five years later Dr. Simon filed an Amended Complaint. In April 2019, The United States elected not to intervene in the action, and the case was unsealed.
Thereafter, the United States settled the FCA claims against HealthSouth and filed a Stipulation regarding the Settlement. See DOJ Press Release ->
On July 3, 2019, the district court dismissed the primary FCA claims with prejudice but retained jurisdiction to resolve Dr. Simon’s retaliation claims under the FCA’s retaliation provision, as well as any claims for attorney’s fees and costs.
The current operative complaint is the Third Amended Complaint, filed January 10, 2020, whereby Dr. Simon asserts FCA retaliation claims against HealthSouth. Dr. Simon alleges that she complained to HealthSouth about alleged fraud being committed, including the use of allegedly false diagnosis of disuse myopathy (“DM”) and other diagnoses by HealthSouth physicians and other fraudulent practices. Allegedly, as a result of her complaints, Dr. Simon faced various adverse employment actions and was constructively discharged.
On February 12, 2021, the district court ultimately granted Healthsouth’s Motion for Summary Judgment on Dr. Simon’s FCA retaliation claims. See Order Granting HealthSouth’s MSJ and Judgment in its favor->
The district court held that in taking the facts in the light most favorable to Dr. Simon, she lacked a reasonable basis to think that doctors were fraudulently relying on DM to admit patients, much less submitting false claims to the government based on that diagnosis. At most, there is evidence that Dr. Simon – and other physicians – disagreed with the diagnosis of DM. But this disagreement does not render fraudulent any claims based on the DM diagnosis by other doctors who believed in DM. Thus, Dr. Simon did not engage in protected activity and summary judgment for HealthSouth was warranted.
In reaching its holding, the district court engaged in an analysis of the applicable law regarding FCA retaliation claims.
To establish a claim under Section 3730(h), a plaintiff must show: (1) the employee engaged in conduct protected under the FCA; (2) the employer knew the employee was engaged in such conduct; and (3) the employer retaliated against the employee because of the protected conduct.
Under the first prong of that test, an employee’s lawful acts are in furtherance of an action under this section if she investigates matters that reasonably could lead to, or have a distinct possibility of leading to, a viable False Claims Act case.
A party claiming protection must have an objectively reasonable belief that an employer was engaged in violations of the FCA.
Importantly, the FCA’s retaliation provision only protects employees where the suspected misdeeds are a violation of the FCA, not just of general principals of ethics and fair dealing. In order to initiate an FCA action, whether a qui tam or a retaliation action, an employee must suspect that her employer made a false claim to the federal government.
In this action, there is a geniune issue of material fact as to whether Dr. Simon complained of any alleged fraud at all. Dr. Simon’s complaints were all verbal, and there is no contemporaneous documentary evidence of her complaints.
In the summary judgment briefing papers, Dr. Simon failed to respond to HealthSouth’s arguments about Dr. Simon’s alleged complaints not related to DM. As such, the district court found Dr. Simon abandoned her argument that she had an objectively reasonable belief that fraud was occurring on conduct besides the use of the DM diagnosis and the coding of that diagnosis.
Accordingly, the district court needed only to address Dr. Simon’s complaints about DM and its coding. Dr. Simon asserts that the use of the DM diagnosis and the use of its coding for billing the government was improper. Yet, Dr. Simon was not responsible for billing for hospital services, had no involvement in HealthSouth’s coding or billing process, and did not see the bills.
Dr. Simon did not have any knowledge of what diagnoses HealthSouth relied on when billing the government for services provided to patients diagnosed with DM. Nor did she have any knowledge, at the time, that HealthSouth was billing the government using the code for the DM diagnosis.
Even if Dr. Simon knew about the use of the coding form the DM diagnosis, the record did not support that Dr. Simon could believe the code’s use was fraudulent given her lack of knowledge of coding.
As a result of the forgoing, the district court found Dr. Simon lacked an objectively reasonable belief that the use of the DM diagnosis impacted any payment for services. Dr. Simon had no knowledge from which she could reasonably believe that claims based on a diagnosis of DM or its coding were actually submitted to the government. Moreover, even if Dr. Simon had knowledge of how HealthSouth coded and billed for patients with DM, a reasonable difference in opinion between medical professionals does not create a false claim under the FCA.