by Ben Vernia | August 19th, 2010
In an unpublished August 12 opinion in U.S. ex rel. Frazier v. IASIS Healthcare Corp., the Ninth Circuit upheld the dismissal of the qui tam complaint of a healthcare company’s former chief compliance officer and vice president of ethics and business practices, on the grounds that it lacked sufficient particularity. The whistleblower alleged that his former employer obtained referrals from sources through kickbacks and prohibited financial relationships, and falsely certified compliance on annual cost reports. Even applying the recently-announced “flexible” particularity rule in the Circuit, the Court concluded that the relator’s allegations of medically unnecessary claims were “conclusory at best” and that although the relator need not plead representative examples of false claims, he was required to provide “‘reliable indicia’ that IASIS Healthcare submitted claims for medically unnecessary procedures.”
Likewise, his allegations regarding Stark and Anti-Kickback violations failed to meet the criteria:
Again, Frazier need not provide representative examples to plead express false certification, so long as he sufficiently alleges an illegal kickback scheme violating the Stark Act or the Anti- Kickback Provision and provides a sufficient basis to infer that IASIS Healthcare or its hospitals expressly certified compliance with those provisions as part of the process of submitting Medicare and Medicaid claims for patients referred by doctors involved in those schemes.
The Ninth Circuit nevertheless concluded that the District Court erred in dismissing the whistleblower’s case with prejudice. Although the relator’s complaint was his third, the Court reasoned, the trial court “did not give sufficient weight to the fact that the first two complaints were filed under seal and that the motion to dismiss the Second Amended Complaint was the first time that [the relator’s] claims were subject to a Rule 9(b) sufficiency analysis.”
In another issue, the Court reversed the District Court’s denial, on mootness grounds, of the company’s motion for sanctions, which was based on the relator’s use of the company’s allegedly privileged documents in his qui tam suit.
